Team validating coffee farmers’ debt to banks to submit report today

A farmer works in a coffee field /FILE

A seven-member task force set up by the government to validate coffee producers’ debt to financial institutions is expected to submit the report by today.

Speaking at a meeting of cooperative leaders in Naivasha last week, Commissioner for Cooperatives David Obonyo said to avoid duplication of payments, the Ministry of Cooperatives and National Treasury and Planning constituted the group of tasked with validating all debts and that the team should submit an interim report.

“According to the claims of the counties, the debts accumulated by the financial and agricultural cooperative societies amount to 9 billion shillings. The figure could remain the same or decrease depending on the authentication by the seven-member task force,” Obonyo said.

Loans that farmers had borrowed largely from banks and Saccos to finance, among other needs, coffee processing equipment had reached Sh6.8 billion in January, but a closer review completed in May saw this amount reaches 9 billion shillings.

Speaking at the forum, CS Wycliffe Oparanya Cooperative and Micro Small and Medium Enterprises confirmed that the government is committed to paying accumulated debts on behalf of coffee farmers, as part of boosting their morale to produce more grains.

“In the current financial year, the National Ministry of Treasury and Planning granted Sh2 billion as part of debt clearance. This demonstrates the government’s willingness to support the coffee industry which is currently struggling with low production and strong competition from other beverages,” Oparanya said.

Oparanya regretted that the coffee sub-sector, once one of the major foreign exchange earners, was currently grappling with poor governance and high corruption, a situation which he said was robbing farmers of their hard-earned sweat.

“The government will ensure that laws and regulations are fully implemented to ensure a level playing field. We have had cases in coffee companies where directors and managers borrowed money to pay producers a high rate based on income earned,” the CS noted.

He added that farmers in these companies cannot meet their daily financial obligations and therefore warned that the government will not tolerate corruption in the coffee industry as it strives to restore confidence in the sector .

This is the second phase of debt cancellation by the government after the first which began between 2006 and 2019 and saw at least Sh12 billion written off.

For example, the state forfeited the stabilization of export earnings of Sh5.8 billion to the Cooperative Bank, money that had been provided by the European Union under a compensatory financing program to stabilize export earnings of the African, Caribbean and Pacific Group of States (ACP).

President of the National Coffee Cooperative Union (NACCU) Limited, Francis Ngone, has welcomed government’s efforts to support the sector, saying the debt forgiveness program would boost farmers’ morale and lead to high production.

According to Ngone, farmers have earned almost Sh10 billion through the Direct Settlement System (DSS) between January and today for coffee sold at the Nairobi Coffee Exchange (NCE).

The payment of these impressive revenues follows the aggressive implementation of reforms in the coffee industry initiated since 2016, allowing farmers to easily benefit from their hard-earned sweat.

“This year we have recorded a significant milestone in terms of coffee payments and strengthening the voice of producers as they now participate in the market arena,” Ngone said.

The settlement system developed by NCE and managed by the Cooperative Bank of Kenya in August last year has contributed to improved revenue payments to farmers, unlike before when revenues took time.