Coffee sector faces revival after Task Force recommendations

June 24, 2016

, -What needs to be done-

To restore the sector to its former glory, the task force proposed a raft of measures which includes the enactment of new coffee sub-sector regulations, the amendment of some sections of the Crops and AFFA Acts 2013. It also recommends reviewing and fast tracking the enactment of both the Warehouse Receipt Systems Bill 2015 and the Geographical Indication Bill, and the incorporation of Nairobi Coffee Exchange into a public company limited by guarantee.

“This excise will cost approximately Sh100 million.”

In a bid to boost the amount of coffee produced in the country, the task force recommends the establishment of a three-year subsidy programme that will cost Sh1.21 billion in the 2016/2017 financial year and Sh2.47 billion in the next two financial years.

“The funding will go to fertilizer subsidy, the provision of planting materials and research and rehabilitation of pulping stations which will include the digital weighing machines, ICT electrification and piping of clean water.”

Both the national and county governments will jointly undertake the capacity building component with the national government contributing Sh200 million and coffee growing counties contributing Sh3 billion.

To address the payment delay issue, the task force recommends the establishment of a cherry advance fund of Sh2.1 billion in the 2016/2017 financial year that will boost Sh500 million in the 2018/2019 financial year due to projected increase of coffee production. The amount will be provided by the Commodities Fund and a Central Depository Unit.

“Through our research, we were able to establish that most coffee growers have limited overseas market intelligence and capacity to handle export logistics. They also lack the capacity to market their coffee and to negotiate and handle a contract. We therefore recommend that the Nairobi Coffee Exchange be a commodity exchange.”

To deal with corruption in the sub-sector, the task force proposes that cooperative society commission not to exceed 15 percent of the net earnings from coffee sales. “Growers and millers should also negotiate and agree on the cost of export bags and the agreed cost to be included as part of the milling agreement.” Additionally, it recommends the end of marketing agents who have for a long time been rigging coffee prices as they act as brokers for the dealers – dealers are those who ideally buy coffee from the Nairobi Coffee Exchange.

To lure the youth into coffee farming, a coffee business school should be established at Utalii College where they would be trained on roasting, retail and management of coffee houses. “Other incentives include waiver of import duty on commercial coffee house equipment and support value addition initiatives such as coffee vending, coffee kiosks and youth-owned coffee house start-ups.”

Part 1 | Part 2

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