The injection of funds and the licensing of more marketers has failed to revive Kenya's coffee industry, despite the currently favourable coffee prices on the world market.
$1.5 million was disbursed through the Coffee Development Fund (CoDF), with the government holding on to a further $6 million that should have been released in April. This was part of $52.2 million that was scheduled to be released in two disbursements in the 2006/07 and 2007/08 financial years.
The introduction of the funds last year was a relief for farmers who have been shunned by other lenders considering the unpredictability of coffee prices. The fund has also allowed farmers to negotiate repayment when the crop fails due to bad weather, disease outbreaks or declining international prices.
However, there are many conditions that farmers have to fulfil before accessing the funds, including belonging to a cluster of 10 farmers; proof that for the past two years their coffee trees have yielded at least 2 kg of the commodity each, and having an acceptable credit rating.
The farmers complain that the arrangement does not qualify them for enough money and the criteria do not take into account the inputs and effort required to make a coffee tree productive. Secondly, the disbursing co-operatives are owed millions of dollars by farmers, who are reluctant to tie production to the borrowed money for fear of the consequences of defaulting on repayments. Thirdly, when coffee yields dropped, farmers abandoned it for other crops and its production deteriorated, making it impossible for the neglected trees to produce the required amount to qualify for the development funds.
Contrary to expectations that more marketers would encourage competitiveness, the double licences issued to them by the current Coffee Act, giving them powers to market as well as auction the crop, have left farmers at their mercy. The marketers buy the commodity at farm gate offers from desperate farmers and withhold payment to recover old debts. Last month, the government said it would revoke double licensing, but this is yet to happen.
Amid this confusion, the country's coffee production has remained low, at less than half of the 130,000 tonnes harvested a decade ago when the sector was at its peak. Over the past three years, the sector has stagnated at 50,000 tonnes despite the government's effort to clear $79 million in outstanding debts owed by farmers to the Coffee Board of Kenya, in addition to those owed to the CoDF.
Kenya is lagging behind in the region as countries like Ethiopia take bold steps in branding and direct marketing of coffee instead of relying on colonial-era auction systems.
The Kenya Planters Co-operative Union, the apex agency of small-scale coffee growers, is hoping that the government will support its plans to brand coffee according to geographical regions as it is done in Ethiopia. KPCU is in the process of zoning four of the country's principal growing areas. Coffee from Kiambu, Muranga, Thika and Maragua will be marketed as Aberdare, while that from Nyanza, Kericho and Kisii as well as Mt. Kenya will bear the brand Blue Mountain.
The union says it requires money to have the brands registered and to obtain patents from both the Kenya Intellectual Property Organisation and the World Intellectual Property Organisation. The registration will enable the union to embark on an aggressive marketing campaign to publicise the different regional brands, marking a radical departure from the existing coffee marketing practice, where what is in the market may not be purely Kenyan coffee, but a mix earning lower prices than premium branded coffee.
The East African
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