Kenya introduces centralized coffee payment system to boost farmer earnings, curb corruption
Starting July, Kenyan coffee farmers will receive payments through Co-operative Bank under new government reforms targeting transparency.
KENYA – Coffee farmers in Kenya will begin receiving payments through a centralized system managed by Co-operative Bank from July 2025, in a government-led initiative aimed at improving transparency and eliminating corruption in the coffee sector.
The new structure was announced by Cooperatives and MSMEs Cabinet Secretary Wycliffe Oparanya during the commissioning of a new coffee factory in Bungoma.
Oparanya emphasized that the move is a critical step in protecting farmers from exploitation by unscrupulous actors within cooperative societies.
“Coffee farmers have long been exploited by dishonest individuals within cooperative societies,” Oparanya stated. “By channeling payments through Co-operative Bank, we aim to close those loopholes and ensure that farmers receive what they truly deserve.”
Under the payment model, farmers will earn KES 40 (US$0.31) per kilogramme of coffee delivered to their cooperative societies.
Of this, 80 percent will be directly remitted to the farmers, while 20 percent will be retained by the societies to cover operational costs or support community development initiatives. Any remaining surplus may be paid out as bonuses to the farmers.
To enhance financial inclusivity, the government is also in discussions with Kenya Commercial Bank (KCB) and Family Bank. These talks aim to ensure coffee farmers across the country can conveniently access banking services, regardless of their geographic location.
“We want to eliminate any barriers to payment and ensure all farmers, regardless of location, can access the services they need,” Oparanya said.
He urged farmers to increase productivity to meet rising international demand for Kenyan coffee and encouraged the youth to engage in coffee farming to secure the future of the sector.
Additionally, Oparanya revealed plans to upgrade a coffee milling facility in Bungoma, allowing for full-cycle local processing. This development is expected to cut costs related to exporting raw coffee and reimporting it as a finished product.
The government also plans to dismantle entrenched cartels in the industry, with new leadership elections for coffee societies set to enhance accountability.
Meanwhile, a report by the Nairobi Coffee Exchange has revealed that the Central region led production, contributing 51 percent of the national output.
Premium AA grade sales improved significantly, especially in Kiambu and Kericho, while Kirinyaga recorded the highest prices at US$353 per 50kg bag.
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