Coffee cooperatives across Kenya are urging the government to prioritize boosting production over implementing controversial reforms to coffee payment systems. The cooperatives argue that the key to revitalizing Kenya’s coffee sector lies in increased access to subsidized fertilizer, quality seedlings, and farm inputs interventions that would position Kenya as a leading global coffee producer.
These calls come amid rising tensions between cooperatives and the government over the Direct Settlement System (DSS), a payment platform introduced in August 2023 and set to take full effect this year. Under the DSS, coffee export proceeds currently paid in U.S. dollars—will be converted into Kenya Shillings and disbursed directly to farmers via M-Pesa or a centralized banking platform managed by Co-operative Bank.
The Nairobi Coffee Exchange has proposed regulations to strip cooperatives of their role in managing dollar proceeds, a move that stakeholders say threatens the financial autonomy of farmers and the survival of cooperative societies. Currently, cooperatives negotiate favorable exchange rates, ensuring better value for their members.
Murang’a Farmers Cooperative Union Chairman Francis Ngone stressed that cooperatives are essential intermediaries between the government and farmers. “A decision to bypass us in payments is tantamount to leaving farmers to operate on their own,” he said. “Focus must shift to raising production to increase farmer earnings.”
Kahuhia Farmers Co-operative Society Chair Godfrey Kanyiri echoed these sentiments, warning that the DSS plan would impoverish farmers and dismantle decades of successful cooperative structures. He also criticized the Capital Markets Authority for introducing levies such as a 1.8% fee on coffee marketers without adequate consultation.
Ruchu-Gacharage Chairperson Margaret Wakaraka highlighted additional concerns, noting that delayed delivery of subsidized fertilizer this season will hamper yields. She called on the government to revamp dilapidated coffee factories to improve quality and output.
The cooperatives are demanding a halt to the DSS implementation, transparent public engagement, and the protection of their financial autonomy. They insist that revitalizing the sector must begin with strengthening farmer support systems, not weakening the cooperatives that have long sustained them.
