KENYA – The Coffee Cherry Advance Fund report has revealed that New Kenya Planters Co-operative Union (New KPCU) has advanced KES5 billion (US$38.56M) in loans to 371,242 farmers as of August 5, 2024.
This marks a significant 354.5 percent increase in loan advancements since mid-November 2023.
New KPCU Managing Director Timothy Mirugi attributed the surge in loan applications to the fund’s low interest rates and enhanced governance and disbursement systems.
He noted that the ease of obtaining loans, with minimal collateral requirements and less paperwork compared to traditional financial institutions, has greatly encouraged farmers.
“The increase in loan advancement has also been prompted by lack of collateral apart from coffee and cherry required, and no cumbersome paperwork,” Mirugi said.
The report highlights that KES1.5 billion (US$11.57M) has been received through the Direct Settlement System (DSS) since the start of the 2023/24 coffee year.
The DSS, managed by Co-op Bank, allows farmers to receive payments directly after the sale of their coffee, streamlining the payment process and reducing reliance on intermediaries.
The coffee Cherry fund was introduced by Former President Uhuru Kenyatta in 2019 as part of bigger plans to revive the struggling coffee sector.
Mirugi revealed that as of November 14, 2023, the farmers had borrowed KES1.1 billion (US$8.48M), adding that New KPCU in collaboration with other stakeholders have aggressively undertaken sensitisation sessions with farmers countrywide on the importance of borrowing the fund.
Meanwhile, the Nairobi Coffee Exchange Limited (NCE) has implemented new trading rules to address malpractices on the trading floor.
The new rules, based on the Crops Regulations 2019 and Capital Markets Regulations 2020, include the full implementation of the DSS and the introduction of an auction levy for coffee transactions.
Since the implementation of DSS, over KES 13 billion (US$100.26M) has been remitted to farmers.
During the recent coffee auction at NCE, coffee farmers earned KES715.7 million (US$5.5M) from the sale of 19,478 bags, up from KES625.4 million (US$4.8M)earned from the sale of 19,031 bags in July.
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