The government's (Kenya) move to allow independent coffee exports has turned into a rip off for farmers, who now have to pay for sisal bags in which the beans are packed. Independent dealers who entered the market mid last year are demanding that the farmers pay Sh130 ($1.95) for every bag of coffee they deliver for sale at the auction. This is a cost farmers did not bear under the former single marketer arrangement.
The new regulations came through a Coffee Board of Kenya (CBK) circular that directed farmers to provide the bags through their millers. The millers ultimately transferred the cost to farmers, through deductions from their earnings based on the amount of coffee delivered.
Though CBK says the move was necessary, farmers say all it did was to open an avenue for agents to eat into their earnings. "The impression is that the bags are necessary to export coffee, but we know that coffee is exported in containers," said Mr Githae Hunyu, chairman of Mutheka Coffee Society in Nyeri South district.
Export coffee is usually drained from the sisal bags into containers, leaving the dealers with the bags, which they re-sell to farmers at Sh90 ($1.35) a piece.
Coffee prices have been going down and farmers are receiving as low as Sh7 (US10 cents) for a kilogramme, with the exceptionally high quality grades being bought at Sh35 (US50 cents). The Sh130 for the sacks effectively shaves off a huge chunk of the farmers' earnings.
Mr. John Karuru, the operations manager of Thika Coffee Mills, said the regulation was effected by the Coffee Board of Kenya under pressure from dealers and without any consultations with farmers and other stakeholders in the industry. He noted that the coffee dealers benefited from the sacks since they "re-sell them to one of the local millers at Sh90."
He said the practice was hurting farmers. "The CBK should withdraw this requirement and go back to the way it was before, when dealers provided the bags," said Karuru.
Another regulation facing stiff opposition is the green light given to players to combine milling, marketing and trading licenses. This gas caused fear of the formation of cartels. "These regulations should be changed since it is a simple thing that does not need to go to Parliament. It can simply be done by issuing a legal notice," said Mr Githae.
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