This archive report was first published on 2 July 2019.
On July 1, President Uhuru Kenyatta announced a soft financing package for coffee farmers, which includes a Sh3 billion cherry advance.
As part of the implementation of this package, the State Department of Cooperatives has started auditing over 500 coffee societies to determine their debt levels and insolvency status.
According to Cooperatives Principal Secretary Ali Noor Ismail, the audit is necessary to ensure that the funds are distributed fairly and efficiently.
“Over 70 percent of the farmers are aggregated in cooperative societies, and that is why we are auditing these entities so that we can use them in distributing the funds,” said Mr Noor.
The cherry advance levy was announced in March and is aimed at helping farmers meet their financial obligations after harvesting.
Normally, a farmer harvests and sells their crop through co-operatives but has to wait for more than a month for payment.
The government will recover the funds by deducting the amount advanced plus a three percent interest rate.
The reforms are designed to boost production, reduce the cost of processing and milling, as well as transaction costs at the auction market.
Kenya’s coffee production has significantly dropped compared to regional peers like Uganda.
Since the early 1990s to the 2010/11 crop year, the area under coffee has declined by 35 percent from 170,000 hectares to 109,795 hectares as farmers abandoned the crop due to poor management.
