Coffee growers in the dark over how the market works
Business
By
Boniface Gikandi
| Dec 19, 2023
The majority of cooperative societies and estates dealing with coffee are yet to open dollar accounts to enable the millions of growers to reap better returns from the lucrative market.
A study conducted by the Kenya Coffee Producers Association between August 1, 2022, and August 31, 2023, revealed that only 19 per cent of the societies operate dollar accounts that facilitate better payments after the sale of their coffee.
A report titled "Smallholder Coffee Farmer Inclusion Project" explains that the majority of societies have a negative perception of dollar accounts, citing it as expensive to maintain and complicated to operate.
The report collected from farmers from 22 counties reveals that only 11.5 per cent of the growers are familiar with and understand the marketing and milling procedures.
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On the operations at the Nairobi Coffee Exchange, the report outlined that despite the presence of online trading platforms in Nyeri, Kipkelion, Kirinyaga, Machakos, and Bungoma, majority of the growers are yet to use the facilities due to a lack of adequate knowledge on auction coffee trading.
Association chairman Peter Gikonyo said they will campaign to ensure societies with more than 800,000 farmers are compliant to enable them to reap benefits from the produce.
Mr Gikonyo said the brokerage firms receive payments from the buyers in dollars and have the liberty to convert them into Kenyan shillings.
"The rate of conversion is not communicated to the growers. That's why many of the farmers end up losing the value of their produce," said Gikonyo.
He added that the procedure demands the farmers and estates open dollar accounts to enable them to reap maximum benefits.
The report further exposes that 87.4 per cent of growers are not conversant in milling and marketing contracts that their societies enter with service providers licensed by the government.
In contrast, the service providers draft the contracts agreements that the society leadership endorses.
"The law states that the societies should formulate the contracts to be signed by the service providers," reads part of the report.
Gikonyo said they established that many of the societies fail to ask for pre-milling analysis reports from the millers.
"They are only issued with the post-milling reports," he said.
The report also establishes that the majority of the farmers lack knowledge on the reserved price setting that can allow them to engage the marketer on price setting.
During the function, coffee farmers regretted that returns from the market were low when compared to the production costs.