In a strategic bid to rejuvenate Kenya’s coffee production and amplify its global market presence, the government has unveiled an ambitious roadmap for the next five years. Patrick Kilemi, the Principal Secretary in the Department of Cooperatives, outlined the comprehensive plan, emphasizing the administration’s unwavering commitment to drive coffee production figures to new heights.
With a determined approach, the government aims to elevate the current coffee production of 51,000 metric tonnes to an impressive 81,000 MT by 2024, and eventually surge to a remarkable 260,000 MT by 2027.
Kilemi revealed a multifaceted strategy to realize these goals. The government plans to reduce production costs through subsidizing farm inputs, optimizing access to the Cherry Advance Revolving fund at the New Kenya Planters Cooperative Union, and revitalizing the Coffee Research Institute through its reinstatement.
This comprehensive vision was unveiled during a workshop designed to acquaint stakeholders with the newly introduced Direct Settlement System (DSS). The DSS, a technological marvel, is set to be the platform for all forthcoming coffee trading activities in alignment with the revised coffee trading regulations overseen by the Capital Markets Authority (CMA).
Furthermore, the government aims to expedite the restoration of the Coffee Board of Kenya (CBK), a move geared towards heightened oversight and coordination in coffee policy. This strategic realignment is intended to position the country favorably on the global stage and foster close collaboration with County Governments to strengthen extension services.
Calling upon both local and international coffee traders and buyers, Kilemi urged them to play their part in supporting farmers and the government by offering prices that reflect the tremendous efforts invested by farmers and the unparalleled quality of Kenyan coffee.
Highlighting the historical significance of the coffee sector, Kilemi pointed out that during 1984-1990, the coffee sub-sector contributed a significant 30% of total employment opportunities within the broader agricultural landscape. Over time, the number of households engaged in coffee cultivation has surged from 11,000 in 1963 to an impressive 700,000 families between 2019 and 2020.
Analyzing the trajectory of coffee cultivation in Kenya, Kilemi illustrated the evolving landscape. In 1963, coffee was cultivated across 45,000 hectares, yielding 43,778 MT of clean coffee. By 1987/1988, this had expanded to a substantial 170,000 hectares, resulting in a record-breaking clean coffee production of 129,637 MT. However, the subsequent years saw a decrease in the cultivated area, falling to approximately 116,000 hectares by 2019/2020 and yielding 36,867 MT.
Lisper Ndungu, the acting CEO of the Nairobi Coffee Exchange (NCE), provided insights into the facilitation of the DSS. The Cooperative Bank of Kenya (CBK) has been selected as the designated facilitator, streamlining payment processes for coffee farmers across the nation.
Stakeholders within the coffee market underwent a comprehensive orientation on the operations of the DSS, encompassing brokers, traders, warehouse operators, coffee farmers, and other service providers.
This transformation of the regulatory landscape began on April 3, 2020, with the gazetting of the Capital Markets (Coffee Exchange) Regulations 2020 by then National Treasury and Planning Cabinet Secretary, Ukur Yatani. This transformation placed the NCE and its members under the watchful regulatory umbrella of the CMA.
Adhering to these regulations, coffee offerings at the NCE will be managed by brokers, and once purchased, proceeds will be channeled into the DSS. Payments will then be disbursed to all participants from this centralized facility.
The inception of the DSS can be attributed to a pivotal recommendation from the National Task Force on Coffee Sub-Sector Reforms, established in 2016 under the visionary leadership of former President Uhuru Kenyatta.
By: Montel Kamau
Serrari Financial Analyst
August 11, 2023
photo source Google
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