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Sh6 billion write-off for coffee farmers

Over 600 farmers will benefit from President Ruto’s plan to write off Kes6 billion in debt held by coffee farmers, as a means to rejuvenate the struggling sector and boost their livelihoods. This announcement is part of the ongoing coffee reforms intended to expand cultivation acreage and enhance farmer revenues, President Ruto said while addressing Kenyans living in the US on Monday.

“In the next Cabinet meeting, we will approve a write-off of Kes6 billion to our farmers, so that we can reduce debts on coffee farming,” Dr Ruto said.

The debt relief plan was initially proposed in January by Co-operatives and Micro and Small Enterprise Cabinet Secretary Simon Chelugui but gained momentum with Deputy President Rigathi Gachagua’s discussions with coffee sector stakeholders.

CS Chelugui had indicated that the government might consider waiving additional phases of debts owed by coffee farmers.

In April, Mr Chelugui announced a forensic audit of the Kes4 billion debt that coffee farmers owe various value chain players. The audit aimed to verify the exact amount overdue and to identify any debts previously waived.

“We are currently undertaking forensic audit data we have received from Co-op Bank, co-operative unions, and commodity funds. The verification process aims to ascertain the true picture in terms of the amount overdue and whether there are debts that were waived last time,” said Chelugui.

Read also: Coffee farmers to Gachagua: Weed out cartels and fix pricing of our produce

Cabinet approval

Upon concluding the verification, the ministry was to prepare a memo for Cabinet discussion and approval. Once approved, the National Treasury and Planning Cabinet Secretary would then be authorized to officially waive the debts.

However, the debt waiver initiative dates back to former President Mwai Kibaki’s administration in 2006, which aimed to help local farmers overcome growth barriers.

Coffee, Kenya’s third-largest agricultural export, has faced significant challenges despite employing a substantial portion of the population, with 75 percent of farmers being smallholders. The sector has struggled with low production and financial instability, prompting the government to take decisive action.

According to statistics from the National Coffee Directorate, Kenya exported 47,861 metric tonnes of coffee valued at Kes36.6 billion in the 2022/23 season. Also, the Agriculture and Food Authority report released in March 2024 highlighted that the coffee sub-sector had mixed performance because, while land under coffee cultivation increased by 2.1 percent to 111,709 hectares in 2023, production dipped.

President Ruto’s promise also included the establishment of a Kes2 billion fund to support cherry farmers, providing financial cushioning while waiting for coffee auctions. This intervention is expected to alleviate the immediate financial pressures on farmers. The Kes2 billion fund is among the budgetary proposals for the Financial Year 2024-2025 and is subject to Parliamentary approval.

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