Kenya eyes new Coffee Bill to streamline coffee value chain operations

KENYA – Kenya is in the processes of passing the proposed Coffee Bill 2020 into law as it is currently on the table of discussion by the legislative arm of government.

The proposed bill seeks to govern activities around one of the country’s top export earner as part of on-going agricultural reforms that seek to streamline operations and increase the farmers’ incomes.

According to the new drafted laws, millers and market agents are prohibits from lending to farmers as a Kshs. 3 Billion (US$29.5m) Cherry Advance Fund was created earlier last year, specifically for funding purposes.

This is in response to the high-interest rates that the farmers have been subjected to from exorbitant advances.

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To this end the newly formed fund lends at 3% and farmers have been further advised to obtained financing from their SACCOs or licensed commercial banks.

On the other hand, factory management/ societies will also find it hard to borrow money as the bill prohibits them from using farmers’ assets as collateral for any reason.

This is meant to protect farmers’ assets as some cooperative societies have found themselves under the threat of being auctioned due to debts.

The coffee bill has also capped the milling fee at US$40 per ton

Further to that, the bill proposes that independent factories can apply to become stand-alone societies under the co-operative societies act if they so wish or if their members want them to be registered as such.

This will allow factories to move away from societies that collude with millers and marketing agents to steal from them.

According to the new drafted laws, it seeks for the establishment of the direct settlement system (DSS) to act as the clearinghouse for receipt and disbursement of payment from coffee sales.

DSS is important as it will freely avail information on earnings from all coffees sold from Kenya by all marketing agents through both auction and direct sales through the establishment of the Nairobi Coffee Exchange.

In addition, it will enable payments to all coffee value chain players (farmers, factories/societies, millers, marketing agents, auction organizers) to be done directly and transparently to their accounts.

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To ensure fair pay to farmers, the bill has also capped the milling fee at US$40 per ton and capped milling losses at 18%.

This proposal will force millers to invest in efficient systems for the benefit of farmers.

The bill also re-establishes the Coffee Research Foundation as the Coffee Research Institute which will be autonomous in its operations, implementation of programs, and in the allocation and management of its resources.

It will be the lead agency in coffee breeding; in the developing climate-resilient coffee crop varieties and in leading the scientific effort to strengthen Kenya coffee’s resistance to diseases and pests.

Most importantly, the institute will be the custodian of the Kenyan Coffee Genome and the primary instrument for making modern genomics resources available to researchers working across the coffee production chain.

Kenya’s coffee earning for the month of January 2021 reached Ksh. 5 billion (US$45.5m), a 94% rise from the Ksh2.6 billion (US$23.7m) attained in January 2020.

The rise in earning is attributed to high demand for the country’s coffee in the global market, higher marketed volumes and improved prices at the auction.

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