Oparanya Orders Direct Payment to Coffee Farmers as Part of 10 Key Changes

The government has ordered that starting next year, all coffee farmers will receive their earnings directly from the Nairobi Coffee Exchange.

This directive is part of ten issued by the Cabinet Secretary for Co-operatives and Micro, Small, and Medium Enterprises (MSMEs) Development, Wycliffe Oparanya, on November 18. The directives seen by Kenyans.co.ke are directed to all coffee co-operatives, unions, associations, estates, the Nairobi Coffee Exchange, and Direct Settlement System providers.

Oparanya in the notice directs that cooperative societies’ administrative and operational costs be capped at 20 per cent of gross coffee earnings, subject to periodic review by the Commissioner for Co-operatives.

Furthermore, starting the next cycle, cooperative societies are to lodge service contracts and liabilities with commercial banks for settlement through the Direct Settlement System.

“All cooperative societies shall not mix the society’s operations monies with the monies that belong to the growers, and the societies shall maintain two separate accounts to facilitate payments to members through the Direct Settlement System,” also directed Oparanya.

In another directive that will come as a huge welcome to coffee farmers, the CS ordered that societies and associations only seek loans upon approval by the members and as approved through an annual general meeting with attendance and approval by the County Co-operative Director and the Commissioner for Co-operative Development.

Oparanya has also instructed that societies digitize coffee weighing scales and stock cards, centralise data access for growers by 2024/2025, and insure coffee against loss/damage, and ensure compensation for breaches or negligence by the license holder.

According to the notice, all license holders must bolster security at pulping stations or transport coffee to safer locations when necessary.

For officials holding roles in both primary cooperative societies and Saccos, the government has ordered they relinquish one role immediately.

Most of the changes were part of the coffee reform talks initiated by former Deputy President Rigathi Gachagua to improve the sector’s profitability and competitiveness. The orders stem from the Crops (Coffee) (General) Regulations 2019. 

These regulations are part of the broader framework under the Crops Act of 2013 and aim to regulate and support the coffee industry.

The letter was copied to Deputy President Kithure Kindiki, Cabinet Secretary, Ministry of Agriculture and Livestock Development Andrew Karanja, CEO, Capital Markets Authority, Nairobi Coffee Exchange and Council of Governors, and Director General, Agriculture and Food Authority.