NAIROBI, Kenya – The New Kenya Planters Cooperative Union (New KPCU) has supported Kenya’s coffee farmers by disbursing Sh5 billion in cherry fund loans to 371,242 farmers.
This marks a remarkable 354.5% increase in loan advancements since mid-November 2023, a testament to the growing confidence among farmers in the loan program, which offers low interest rates and streamlined governance.
Timothy Mirugi, the Managing Director of New KPCU, attributes the surge in loan uptake to the favorable terms of the fund.
“The increased borrowing is driven by the absence of collateral requirements, except for the coffee and cherries themselves, and the lack of cumbersome paperwork typical of traditional financial institutions. As long as a farmer is verified as a coffee producer in Kenya, they can access the funds,” Mirugi explained.
The Direct Settlement System (DSS), managed by the Co-operative Bank, has played a pivotal role in this success by ensuring swift disbursements and efficient recovery of funds once the coffee is sold.
The DSS has also addressed the issue of delayed payments, a long-standing concern among coffee farmers.
Since the introduction of the DSS in October 2023, Sh1.5 billion has been recovered, demonstrating the system’s effectiveness.
The Nairobi Coffee Exchange selected Co-op Bank as the DSS service provider after a competitive bidding process, which saw nine financial institutions submit bids.
The loan program has seen particularly high uptake in seven counties from the Mount Kenya region, which collectively borrowed Sh2.9 billion, accounting for 58% of the total amount disbursed.
Nyeri County topped the list with 70,660 coffee growers borrowing Sh701.1 million, followed by Kirinyaga, where 70,353 farmers borrowed Sh566.7 million.
Other counties, including Kiambu, Murang’a, Embu, Meru, and Tharaka Nithi, also saw substantial loan uptake.
Farmers in Trans Nzoia, Uasin Gishu, Nandi, Migori, Nyamira, Baringo, and Kisii received Sh582.7 million in loans, benefiting nearly 20,000 farmers.
In the week leading up to August 5, 2024, New KPCU disbursed Sh69.2 million to 5,370 beneficiaries across 14 counties.
The highest disbursement during this period was in Machakos County, where 4,915 coffee farmers received Sh45.9 million in cherry advances.
The cherry fund, established during the 124th Session of the International Coffee Organisation (ICO) in March 2019, initially received Sh3 billion.
The Kenya Kwanza government further boosted the fund with Sh4 billion in December 2023, as part of a broader strategy to revive the once-thriving coffee sector.
Additionally, the government has begun injecting Sh6.7 billion into a coffee farmers’ bailout plan.
President William Ruto has urged coffee cooperatives to rely on the Coffee Cherry Advance Revolving Fund instead of seeking loans from commercial banks.
The fund was designed to provide affordable and accessible financial support to smallholder coffee farmers, specifically those with land under coffee not exceeding 20 acres.
