Uhuru’s Ksh.3 billion coffee fund hit by lengthy delay


Uhuru's Ksh.3 billion coffee fund hit by lengthy delay

In Summary

  • Delay to the disbursement of the fund pronounced by President Uhuru Kenyatta at the end of March spells doom for coffee farmers who had until now pegged their operations in the 2019 crop year to the fund's injection.
  • The financial status of KPCU lies hidden away from the public domain with enquiries on the books by Citizen Digital to the union’s management going unanswered during the week.
  • The operation of the cherry fund sits close to the heart of President Uhuru Kenyatta and makes part of ongoing industry reforms to recoup back gains to farmers who until now are the least to benefit from the trade.

The implementation of the Ksh.3 billion evolving cherry advanced coffee fund faces a lengthy delay, this as the state ties up the operation of the kitty to the restructuring of the Kenya Planters Cooperative Union (KPCU).

Delay to the disbursement of the fund pronounced by President Uhuru Kenyatta at the end of March spells doom for coffee farmers who had until now pegged their operations in the 2019 crop year to the fund’s injection.

“We want to channel the cherry fund through KPCU as we wouldn’t want to have any new institutions for every other fund created,” Trade and Industry Cabinet Secretary Peter Munya told a news conference on Thursday.

The revelation by the Cooperatives Ministry pushes back the operation of the fund by at least 12 months, as the government seeks to restructure the management and assets of the rundown farmer union.

Further, the tie-up of the Ksh.3 billion kitty to the operations of KPCU casts a shadow of doubt to the fruition of the relief fund to coffee producers, there being no assurances to the shaping up of the planters cooperative.

“It’s hard to even establish who really owns KPCU. In spite of the solution lying outside the establishment of new institutions, the gamble on KPCU is a short-cut by government. Farmers have already diversified out of the union, forming their own associations,” said Tegemeo Institute Research analyst Timothy Njagi.

Paranoia

KPCU which was once a force to reckon representing a farmer base of 700,000 small-scale farmers under 300 cooperatives and 200 estate farmers has in the past decades fallen into a state of disrepair.

Currently, the union is the subject of a criminal probe at the end of what has been years of mismanagement and financial plunder perpetrated by criminal gangs, political sabotage and cartels.

CS Munya begun the audit of the union at the start of the month following a presidential directive on the restructuring of the cooperative alongside the Kenya Farmers Association (KFA) in July with a view of recapturing KPCU’s assets for the benefit of its primary constituents-the farmers.

The financial status of KPCU lies hidden away from the public domain with enquiries on the books by Citizen Digital to the union’s management going unanswered during the week.

However, court filings from 2014 valued KPCU assets as an estimated Ksh.5 billion.

The Cooperative fell into liquidation in October of 2009 following a spree of funds misappropriation that left the board with the inability to settle the union’s substantive liabilities.

It is from the harsh realities of the status of KPCU and the ghosts of unsettled bills to coffee farmers that stakeholders in the industry now point a finger at.

“We already know the cooperative has failed to run on its own two feet. Without proper audit, farmers will not derive any benefits from the fund,” Agronomist Njue Nyaga said.

While the cooperative model has in the past been tested and proven, the devolvement of agriculture to counties further sets the State on a collision course with the devolved units over the management of coffee produce.

“Under the current dispensation, and even with the restructuring process, the interest of counties has to be on boarded. The state would otherwise risk a stalemate and we would not see any changes to the struggling coffee sector,” said Strathmore University Policy Analyst Dr. Dennis Otieno.

‘Good intentions’

The operation of the cherry fund sits close to the heart of President Uhuru Kenyatta and makes part of ongoing industry reforms to recoup back gains to farmers who until now are the least to benefit from the trade.

Enshrined in the 2019 Crop and Capital Markets Coffee Exchange regulations, the reforms seek to make farmers the primary beneficiaries of the cash-crop ridding the market off middlemen, brokers and goons.

In 2016, President Kenyatta established the Coffee Sub-Sector Reforms and Implementation Committee to reach the ends, with the committee reporting back to the President in 2018 with an outline of key recommendations to end rot in the once thriving industry.

The forensic audit of farmer cooperatives and the breaking up of coffee marketing away from the monopolized Nairobi Coffee Exchange (NCE) made up some of the committee recommendations.

Even so, farmers are until now yet to read any benefits from the ongoing deliberations nearly three years into the sanctioned scrutiny of the agriculture sub-sector.

Citizen Digital sources have informed of farmers quickly losing faith with the Prof. Joseph Kieyah led committee sighting political interference.

At the same time, there are claims of the committee being misused to create political mileage and clout to water down any real gains on farmers.

The government hopes to inject and additional 10,000 metric tons (MT) of coffee, pushing earnings by an additional Ksh.3 billion per annum through the overhaul industry changes.

This in a view to correct dwindling output which sits at an average 50,000MT against a high of 130,000 MT in the 80s’.

Kenya risks being thrown out of the international coffee market as productivity nears the floor with the trading license being pegged on the production of at least one percent of the world coffee production.

The country’s coffee production has since fallen behind that of Uganda with farmers abandoning the crop to venture out in more productive ventures including macadamia & avocado farming, livestock rearing and real estate.

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Story By Kepha Muiruri
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