The liberalization of the coffee sub-sector in the country continues posing a serious sustainability threat to the primary coffee co-operative societies across the country, following smallholder farmers hawking their coffee beans to middle-men and dealers instead of delivering the same to their primary co-operative societies.
What started as a bubble in the cup of coffee turned out to be a brewing storm when the Coffee Act No.9 of 2001 was enacted, with majority of the sector’s players misinterpreting it to mean a free market economy; loosely translated as ‘soko huru’ in local the slang.
This liberalization perception has prompted many players in the coffee sector, especially producers and middle-men, to view coffee as any other crop despite it being the country’s leading foreign exchange earner.
The coffee industry in Kenya used to be government-regulated and controlled until its liberalization in the 1990s following pressure from the International Monetary Fund (IMF).
It was regulated by the government through the Coffee Board of Kenya (CBK), and the Kenya Planters’ Co-operative Union (KPCU), among other key stakeholders whose operations were controlled by the government to enhance efficiency.
Under the above arrangement, coffee producers benefitted from three categories of payments; advances, credit vouchers and cash on their coffee produce.
It is during that period that smallholder coffee producers enjoyed high prices for their produce as the government controlled production, translating to production of high quality premium coffee in the market.
Liberalization dealt many coffee producers a serious blow since majority of them got confused on what to do under such circumstances in the absence of a government-backed advisory and expertise support.
Since then, various industry experts have come out with divergent views on the way forward in the midst of the coffee liberalization storm.
From some point, the government made unpopular decisions without conducting feasibility studies to ascertain the impact liberalization would have on the future performance of the coffee sub-sector in the country.
In essence, liberalization meant smallholder coffee growers could no longer have control over their own produce following the introduction of marketing agents and coffee millers in the value chain, who to date continue controlling the industry.
Liberalization ushered in the era of mushrooming marketing agents and coffee mills among other various players, whose presence continue compromising coffee prices and production.
It is worth noting that the marketing agents come in after a smallholder has grown coffee, milled, graded and classified it, only for the agent to claim between 2 to 3 per cent of the gross sales, which is explicitly exploitative on the farmer.
Worse still, the marketing agent is the first beneficiary of the coffee sales, being paid as a conduit, as farmers wait for months for their dues.
Listening to smallholder coffee producers at the co-operative societies level, there is no doubt that their feelings are that liberalization of the coffee sub-sector was aimed at reversing the already declining coffee production to cut incomes among the millions of people whose livelihoods depend on coffee.
They argue that liberalization deprived smallholder producers of government field extension services, leading to poor quality coffee production due to lack of expert information services on modern crop husbandry practices.
The removal of monopolies in the coffee sub-sector, they claim, has led to increase in illegal coffee trade syndicates and theft because of unregulated market competition.
There is a universal opinion from coffee producers that the national government, through the Coffee Board of Kenya, needs to reclaim its lost glory and enhance its visibility in the coffee producing zones.
This means more information flow from CBK to the farmers, particularly regarding coffee milling yields, grading, classification, and negotiation of marketing contracts.
Farmers also demand timely and regular payments, as well as provision of low priced farm inputs to ease the burden of high production costs.
The initiatives can only be achieved through direct contact with the farmers; extension services should be revived to ensure production of high quality coffee.
By Ben Oroko
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