The government has unveiled a comprehensive strategy aimed at invigorating coffee production over the upcoming five years to bolster the nation’s standing within the global market for this commodity.
Patrick Kilemi, the Principal Secretary in the Department of Cooperatives, articulated that the administration is resolutely committed to elevating coffee production from the present 51,000 metric tonnes to 81,000 MT by 2024 and subsequently to a substantial 260,000 MT by 2027.
“We are determined to attain this objective by reducing production costs through the provision of subsidized farm inputs, enhancing the accessibility and distribution of the Cherry Advance Revolving fund at the New Kenya Planters Cooperative Union (New KPCU), and revitalizing the Coffee Research by reintroducing the Coffee Research Institute,” Mr. Kilemi stated.
These declarations were made within the context of a workshop centered around acquainting attendees with the mechanics of the Direct Settlement System (DSS).
DSS constitutes a technological framework upon which coffee trading will henceforth transpire, aligned with the new coffee trading regulations overseen by the Capital Markets Authority (CMA).
Mr. Kilemi articulated that the government has intentions to expedite the restoration of the Coffee Board of Kenya (CBK) for the supervision and coordination of coffee policies, all with the vision of positioning the country favorably on the global stage. Collaborative efforts with County Governments are anticipated to fortify extension services.
“We extend an invitation to our coffee traders and buyers, both domestic and international, to support the farmers and the government by offering prices that reflect the hard work put in by the farmers and the superior quality of our coffee,” he added.
Mr. Kilemi also evoked historical data, noting that from 1984 to 1990, the coffee sub-sector had contributed around 30% of job opportunities within the agriculture sector. The number of households engaged in coffee cultivation had risen from 11,000 in 1963 to approximately 700,000 families between 2019 and 2020.
Reflecting on the evolution of coffee cultivation in Kenya, he highlighted that in 1963, the land under coffee cultivation spanned 45,000 hectares (ha), yielding 43,778 MT of clean coffee. By 1987/1988, this acreage had surged to 170,000 ha, resulting in a record-high clean coffee production of 129,637 MT. However, in 2019/2020, the cultivation area had receded to about 116,000 ha, generating a total output of 36,867 MT.
“These figures underscore the magnitude of the work that lies ahead for our sector,” he emphasized.
Lisper Ndungu, the acting CEO of the Nairobi Coffee Exchange (NCE), recently revealed that the Cooperative Bank of Kenya (CBK) has been chosen to facilitate the DSS, thereby simplifying the process of disbursing payments to coffee farmers across the nation.
A comprehensive orientation on the operations of the DSS was conducted for stakeholders in the coffee market, encompassing coffee brokers, traders, warehouse operators, coffee farmers, and other relevant service providers.
The regulatory landscape underwent a transformation when, on April 3, 2020, the Capital Markets (Coffee Exchange) Regulations 2020 were gazetted by the then National Treasury and Planning Cabinet Secretary, Ukur Yatani. This development brought the NCE and its members within the purview of regulatory oversight by the CMA.
As per these regulations, those offering coffee for sale at the NCE are categorized as brokers, and upon commodity purchase by dealers, the proceeds are expected to be deposited into the DSS. All participants will subsequently receive their payments from this facility.
The inception of the DSS can be traced back to one of the pivotal recommendations outlined by the National Task Force on Coffee Sub-Sector Reforms, established in 2016 under the leadership of former President Uhuru Kenyatta.
