Coffee farmers oppose Direct Payment System amid government directives

The government has accelerated coffee reforms, focusing on diverting payment points to the Direct Settlement System (DSS), which has met strong resistance.

President William Ruto, during his Mt. Kenya Development tour two months ago, stirred controversy when he announced that from June, coffee proceeds would be remitted directly to farmers, bypassing cooperative society management committees.

Cooperative Cabinet Secretary Wycliffe Oparanya issued a directive on November 14 last year for the implementation of direct payments, prompting opposition from farmers.

Kirinyaga Senator Kamau Murango called for the suspension of the DSS to allow more engagement with farmers, citing an outcry among growers.

Murango alleged that the DSS involves single-sourcing and that farmers are not represented on the board, leaving them excluded.

“In the DSS, if it was formulated to help farmers, they are not represented on the board at this time,” said Murango.

The Nairobi Coffee Exchange (NCE) has been accused of misadvising the government on the DSS, as coffee unions distanced themselves from convening meetings to address the new payment model.

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In Mt. Kenya, farmers have vehemently rejected the proposed payment plan, citing unexplained anomalies, including transaction charges and dollar exchange issues.

Majority of cooperative societies, among them Komothai, Thangaini, Marumi, Kahuhia, Gatagua, Inoi, Kabare, Kibirigwi, and Baricho, state that the trial program experimented in western Kenya has failed.

Coffee growers Josphat Kanyingi and Jane Nyambura said the government’s move raises suspicion due to the rush to implement the directive without public participation forums.

Kanyingi says the directive, if implemented, will cripple the sector due to reduced income following heavy deductions at the DSS and NCE levies.

“The state was misdirected on the direct payment mode, as tea growers are paid through their respective factories, the same as coffee,” said Nyambura from Kiambu.

Gatagua Coffee Cooperative Society Chairman Nahason Chege confirmed that farmers rejected the directive, stating that it was dismissed in meetings long ago, rendering the debate null and void.

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“We are on the ground, and the directive was rejected long ago in meetings, thus the debate is null and void,” said Chege.

The Chairman of Kahuhia Cooperative Society, Mr. Godfrey Kanyiri, said the state should focus on distributing coffee seedlings and stop interfering with growers’ wishes.

Kanyiri urged the government to waive debts in the societies and assist in distributing coffee seedlings to support increased production.

“The writing is on the wall, and the state should withdraw the directive entirely and instead venture into programs to increase coffee production,” said Kanyiri, adding that in May, they informed Cooperative PS Patrick Kilemi of their verdict on the direct payment model.

Peter Karomo, a coffee and tea value chain expert, says farmers are yet to understand the proposal of being paid directly through the DSS, managed by the Cooperative Bank.

Karomo says the government erred when President William Ruto, during his Mt. Kenya development tour, announced that coffee proceeds would be paid directly from the NCE starting in June.

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“The farmers are knowledgeable in coffee matters and cannot be swayed. The government should engage more to arrive at a decision fit for the growers,” said Karomo.

Karomo asserted that the matter can only be approved by farmers in their general meetings, but under the Coffee General Regulation 2019, the growers are the cooperative society and the estate.

“There is much misinformation about direct payment, as factories lack the infrastructure to communicate their deductions to the DSS,” said Karomo.

A state actor informed farmers that the management committees of farmers’ cooperative societies will be responsible for providing farmers’ particulars to the Nairobi Coffee Exchange, as they are the members’ representatives on the Direct Settlement System.

The DSS ensures proceeds from coffee sales are deposited directly into farmers’ bank accounts, eliminating delays and potential mismanagement.

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Coffee expert Henry Kinyua, a presidential advisor on coffee, said the ministry is conducting public engagement, visiting all regions, and gathering views.

“For now, I am also gathering feedback and insights from farmers through social media platforms,” said Kinyua.

NCE CEO Lisper Ndung’u said proceeds from the market will be remitted by coffee buyers through the DSS for onward settlement to service providers and net payment to growers.

Ndung’u said that after buyers pay for their coffee on prompt dates, the amount will be wired into the society’s bank account, which will be safe from misuse by society management.

The CEO stated that charges for mobile money transfers and bank accounts will be standardized, and money will be wired once the committee submits the required details to the NCE.

By our  Correspondent

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