NYERI, Kenya, July 15 – The government has softened its stance on a directive requiring coffee farmers to be paid directly through bank or mobile money accounts, following growing concerns that the move could destabilize the coffee sector.
The policy, introduced last year by Co-operatives Cabinet Secretary Wycliffe Oparanya, sought to streamline payments by eliminating delays and ensuring farmers are paid promptly after each auction sale. However, key industry players argue the directive could cripple farmer cooperatives, which play a central role in production, aggregation, and marketing.
“As farmers, we feel this system will dismantle our cooperatives, which are essential to our operations,” said Simon Mureithi, a coffee society chairman in Nyeri. “Without them, farmers will be left on their own, unable to access loans or farming inputs.”
Mureithi noted that cooperatives help farmers manage finances, access credit, and secure farming inputs such as fertilizers. He warned that direct payment could result in piecemeal earnings, leaving farmers unable to meet loan obligations or invest in their farms.
In November 2024, CS Oparanya ordered all cooperative societies to submit member data to enable direct remittance of auction proceeds via the Direct Settlement System (DSS). The directive, endorsed by the National Assembly, was intended to address chronic delays in coffee payments, which can stretch for up to a year.
Supporters of the DSS argue that it could revitalize the struggling sector by ensuring transparency and financial empowerment for farmers. But growers in Mt Kenya and Rift Valley regions say the system threatens the sustainability of cooperative societies that have traditionally supported smallholder farmers.
“Who will support farmers with production tools if societies are sidelined?” Mureithi posed. “These cooperatives are more than just marketing agents — they are the backbone of coffee farming in this country.”
In a recent meeting in Meru, CS Oparanya appeared to distance himself from the directive, saying he could not provide clear answers about the system’s implementation. He instead pointed to Parliament, which passed the bill authorizing direct payments.
A source at the Ministry of Co-operatives told Capital News that the government has delayed the DSS rollout out of concern that undermining cooperatives could collapse the coffee industry.
