- The debt waiver was approved by the Cabinet on Tuesday, June 11 during a meeting chaired by President William Ruto at State House.
- Lenders incluing saccos were given seven days to submit to the Ministry for Co-operatives the list of all farmers who owe them money to facilitate payment.
Image: MOSES KURIA/X
The government had delivered a shocker to lenders owed money by coffee farmers and said the Sh6.8 billion debt waiver extended to the farmers will be paid directly to their bank accounts.
Public Service, Performance and Delivery Management CS Moses Kuria said in a statement on Saturday it’s upon lenders to pursue whatever means to compel the defaulting farmers to pay up.
“Good news to coffee farmers. The Sh6.8 billion debt waiver approved by Cabinet last week will be paid directly to farmers accounts. It is up to the lenders to subsequently look for the farmers to pay up through a Paybill or whatever,” Kuria said.
He emphasised: “Government is not a debt collector. Going forward farmers are only going to receive loans from the Cherry Advance Fund.”
Initially, the Cabinet had directed coffee cooperatives, saccos and other creditors to submit list of farmers and documents for verification of the amount owed by farmers to facilitate payment.
The debt waiver was approved by the Cabinet on Tuesday, June 11 during a meeting chaired by President William Ruto at State House.
The Cabinet said the Sh6.8 billion will be utilised to relieve coffee farmers of all historical debt burdens.
“Under this programme, the meeting sanctioned the write-off of historical debts amounting to Sh6.8 billion owed by coffee farmers nationwide,” a dispatch from State House said.
The Cabinet gave coffee co-operatives, saccos and other creditors seven days from the announcement of the waiver to submit to the Ministry for Co-operatives, the list of all farmers who owe them money together with supporting documents for verification and processing of payment.
“Any fraudulent and fictitious claims,” the Cabinet warned, “will be dealt with in accordance with the law.”
The directive from Kuria now presents a fresh headache to saccos, coffee cooperatives and other lenders owed money by coffee farmers.
This is because whether or not they clear their debts using the waiver, their credit rating won’t be affected since they will henceforth get loans only from the Coffee Cherry Advance Revolving Fund (CCARF).
The CCARF was established to provide affordable, sustainable and accessible cherry advance to smallholder coffee farmers.
It’s meant to benefit farmers with land under coffee not exceeding 20 acres.
While unveiling the 2024-25 Budget estimates on Thursday, National Treasury CS Njuguna Ndung'u said he has proposed allocation of Sh2 billion to the CCARF.
This, he said, was an addition to the Sh4 billion allocated to the fund in the current fiscal year ending June 31.
Farmers can access advance payment capped at 40 per cent of prevailing average sales at the Coffee Exchange or 40 per cent of payment rate to members by a cooperative society.
They also receive additional Sh40 per kg of P1 cherry; Sh20 per kg of P2 cherry and Sh10 per kg of P3 cherry of past year crop delivered.
The CCARF fund does not accrue any interest. Farmers are only charged a one-off 3 per cent administrative fee.
The New Kenya Planters Cooperative Union (KPCU) was given the mandate to manage and administer the fund to coffee farmers as per the Public Finance Management Act (Coffee Cherry Advance Revolving Fund) Regulations 2020.