Cooperatives and MSMEs Development Cabinet Secretary Wycliffe Oparanya has announced plans to safeguard coffee cooperatives from collapse due to bad management.
The CS said many cooperatives have been collapsing because of “bad dividend manners” where officials declare dividends even when they have made losses.
Oparanya said some of the officials sometimes declare
unrealistic and exaggerated dividends that do not match the performance margins
of the cooperatives, forcing them to resort to borrowing to pay the dividends.
This, he said, has to stop.
“To this end, I have instructed the Commissioner for Cooperatives Development to develop a Dividend Policy for Cooperatives that will ensure that no cooperative borrows to pay dividends or declares dividends when they have made losses. In the end, the spirit of the cooperative movement – “Service to Members” as opposed to profiteering, must be preserved,” Oparanya said.
He was
speaking at a Nairobi hotel on Wednesday during the launch of the strategic plan 2023-2027 for new Kenya
Planters Cooperative Union (KPCU).
The CS said as part of government’s continued involvement in the cooperative movement, the ministry is developing a cooperatives guide, similar to the “Mwongozo” code of ethics for state corporations, which will provide a blueprint for the management of cooperatives.
He further said the Strategic Plan 2023-2027 lays out a comprehensive roadmap for building a resilient and prosperous coffee industry.
“Together, we can sustain Kenya’s coffee legacy, boost productivity, and uplift the livelihoods of our farmers and communities,” he said.
Over the past one year, Oparanya said Kenya witnessed remarkable growth and resilience in her coffee sector.
He said data in the Coffee Yearbook 2022-23 indicates that Kenya’s exports rose to 47,957 metric tonnes, up from 42,858 metric tonnes the previous year.
“This growth highlights the unwavering demand for Kenyan coffee on the global stage, with the total export value reaching an impressive $252.12 million,” he said.
On the domestic front, Oparanya said Kenya witnessed a 19 per cent increase in coffee consumption, with coffee houses expanding from 506 to 791.
This, he said, is a clear indicator of a thriving coffee culture within the country.
Oparanya, however, said, erratic weather patterns and the natural cyclical nature of coffee production resulted in a 6 per cent drop in coffee production to 0.81 million bags during the period under review.
He said the country produced 48,649 metric tonnes of clean coffee in 2022-23 compared to the previous year’s 51,853 metric tonnes.
“On a positive note, the area under coffee cultivation has grown to 111,902 hectares, supported by quality seedling programs that provide farmers with superior planting materials. Looking ahead, we project production for the 2023-24 season to increase to 54,800 metric tonnes,” Oparanya said.
He said overall, Kenya’s coffee production has decreased dramatically from a peak of 128,000 metric tonnes in 1989 to 34,500 metric tonness in 2020-21.
He attributed the decline to high input costs, shrinking coffee-growing areas, delayed payments, climate change, fluctuating market prices as well as weak governance in cooperative societies and outdated legislation as having hindered the sector’s growth potential.
“Despite these challenges, Kenya continues to be the third-largest producer of Arabica coffee in Africa, with our rich, high-quality beans renowned worldwide,” Oparanya said.
Globally,
the CS said coffee production rose slightly by 0.1 per cent to 168.2 million
bags in 2022-23.
He, however, said unfavourable weather impacted regional production with Africa’s production declining by 7.2 per cent.
