Kagwe warns farmer coops against taking loans without clear repayment plans, says Govt won’t continue writing off debts

Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe has warned farmer cooperative societies against taking loans without clear repayment plans, saying the government will no longer continue writing off debts that fail to meaningfully benefit farmers.

He added that stricter accountability measures have been introduced across all agriculture value chains to end the cycle of repeated government bailouts.

While acknowledging that the government is currently in the process of writing off debts in the coffee, tea, and sugarcane subsectors, Kagwe emphasized that such interventions are not sustainable in the long term.

“The government does not have infinite resources for debt write-offs, especially when there is limited accountability or clarity on how the borrowed funds were used,” he said.

Kagwe explained that the state cannot plan for endless debts, as losses are not budgeted for, and stressed that the only lasting solution is to eliminate the concept of debt write-offs altogether.

He cited the coffee subsector, noting that many factory directors had borrowed beyond their capacity to repay, often without the knowledge of farmers, and in many cases lacked proper business plans and accountability structures.

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Reassuring coffee farmers that the government will settle their Ksh 6.8 billion debt, Kagwe highlighted the proposed Coffee Act 2026 as a key measure to address long-standing fiscal management challenges in the sector.

The law proposes the establishment of a Coffee Board responsible for auditing the purpose of loans, identifying beneficiaries, and ensuring repayment plans are in place before approval is granted.

He further stressed that farmers will no longer be liable for loans taken in their name without consent. “Once a project funded by a loan is completed, the beneficiaries, and the farmers must approve it.” He said

Kagwe reiterated that no loan will be approved without a clear repayment plan.

The CS also raised concerns over weak governance in cooperatives, attributing the sector’s persistent challenges to poor leadership. He urged farmers to demand greater transparency and better management from their cooperative officials.

By Obegi Malack

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