Kenya Planters Co-operative Union (KPCU) has received KSh2.7 billion from the National Treasury for lending to coffee farmers part of the KSh3 billion cherry advance levy fund.
KPCU chairman Henry Kinyua said: “We expect that regulations will be gazetted in the next one week or so, already KSh2.7 billion has been credited to our account and we are ready to start the distribution,”
Coffee farmers will get loans at an interest rate of three percent, much lower than the current lending rates by commercial banks of about 13 percent.
Cherry advance levy was announced by President Kenyatta in March 2018, and is aimed at helping farmers meet financial obligations after harvesting crops.
The regulations say an applicant should apply in writing for the coffee advance. The farmer must be a Kenyan citizen, a member of a registered coffee co-operative society and should be affiliated to New Kenya Planters Cooperative Union (KPCU).
Currently, the newly appointed KPCU board will manage the fund with the Treasury. It will appoint a substantive administrator to run daily operations.
The administrator will prepare estimates of annual revenue and expenditure.
Kinyua explained that the board is working on a new technology payment disbursement platform.
“We are currently testing the technology so that once the regulations are approved it will be easy. Equally, we are gathering data on farmers to enable us to process disbursement of advance to the farmers and cooperative societies at a rate of three percent,” added Kinyua.
The government has also announced plans of establishing a coffee research institution, as a measure to revive coffee farming and production in the country.
The US Department of Agriculture attache in Nairobi revealed that Kenyan coffee production in the 2019-2020 financial year dropped to 650,000 bags, the lowest production in over 50 years. “The sector is also losing competitiveness due to other factors such as: increasing cost of labor and inputs; high incidences of pests and diseases; and poor governance of marketing cooperatives.”
Principal Secretary of the State Department for Agricultural Research in the Ministry of Agriculture, Livestock, Fisheries and Irrigation Hamadi Boga during the 18th Africa Fine Coffee Conference and Exhibitions, he said Kenya has been exporting about 44,000 metric tonnes, down from 140,000 metric tonnes it used to export annually.
Kenya coffee is regarded as a specialty and is also widely used for blending coffees.