The National Coffee Cooperative Union (NACCU) has rejected a government directive seeking to implement a direct-to-farmer payment model under the Direct Settlement System (DSS), arguing that the policy threatens to dismantle long-standing cooperative structures that manage coffee earnings at pulping-station level.
NACCU Chairman Felix Mureithi Mwai said the directive issued on November 2024 by Cabinet Secretary for Cooperatives and MSMEs Development Wycliffe Oparanya would undermine the cooperative model that has historically administered farmer payments and provided support at grassroots level.
“The November directive will destabilise cooperatives by redirecting coffee payments straight to members of pulping stations,” Mwai said.
He said cooperative societies are autonomous custodians of coffee funds, and farmers must be allowed to conduct coffee business under their bylaws and the Cooperative Act, Cap 490.”
He added that the government did not conduct broad industry consultations and failed to consider farmers’ legal rights to manage their own coffee transaction frameworks.
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NACCU Secretary Maina Mureithi echoed the concerns, saying farmers must remain free from government micromanagement over sales channels and payment systems. He argued that cooperative societies have been more resilient against systemic malpractice compared to national-level structures.
NACCU said it would engage other small- and medium-scale coffee estates to rally support for its position. Mwai also urged a return to earlier governance systems where farmers exercised greater control over crop husbandry, marketing decisions, and revenue management.
The dispute comes in the wake of a High Court ruling in Kerugoya that temporarily halted the government’s rollout of the DSS. Justice Edward Muriithi suspended the system’s implementation until May 20, 2026, citing insufficient public participation across 15 coffee-growing counties.
The court further found that the Ministry of Agriculture’s appointment of a commercial bank to oversee payouts failed to meet statutory requirements, and that the National Assembly did not ensure the required level of community engagement at the regulatory stage.
The case stemmed from a petition filed by coffee farmers who argued that the DSS was introduced without meaningful input from producer unions, traders, or cooperative leaders. The petition also challenged the Capital Markets (Coffee Exchange) (Fees) Regulations, 2024, which the court ruled lacked adequate public participation in coffee-producing regions.
By Obegi Malack
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