Kenya’s Coffee Union seeks extension for direct payment rule as government boosts sector reforms 

KENYA – The National Coffee Cooperative Union (NCCU) is requesting a one-year extension—until June 2026—for the full implementation of the government’s directive requiring all coffee sale proceeds to be paid directly to individual farmers’ bank accounts. 

NCCU Chairperson Francis Ngone says the proposed extension will allow cooperatives sufficient time to update farmer records, assist farmers in opening bank and SACCO accounts, and enhance financial literacy across the value chain.  

The government’s Direct Settlement System (DSS) was introduced in August 2023 to promote transparency in payments to coffee growers. 

However, nearly two years later, many farmers in rural and marginalized regions still lack access to bank accounts, creating challenges for seamless implementation of the system. 

In a memorandum to Cabinet Secretary for Cooperatives Wycliffe Oparanya, Ngone emphasized the importance of addressing these logistical gaps before enforcement. 

“This extension will enable cooperatives to complete data clean-up, facilitate the opening of bank and SACCO accounts for all farmers, and enhance financial literacy,” said Ngone. 

He also cautioned against politicizing the DSS platform, urging the government to safeguard it from interference by vested interests. According to Ngone, maintaining the integrity of the platform is essential for building trust among stakeholders. 

The NCCU is also calling for a review of the sector’s levy distribution model, raising concerns that the current structure may reduce farmer earnings.  

The union is particularly concerned about the impact of a revised 0.8% brokerage levy, previously pegged at 1.8%, which has been reallocated among the Capital Markets Authority (0.2%), Nairobi Coffee Exchange (0.3%), and the Direct Settlement System (0.3%). 

Ngone noted that coffee unions operating brokerage firms would be financially affected by the changes and insisted on equitable compensation for all service providers.  

“There has been insufficient consultation and clarity on how the funds collected by these institutions directly benefit the farmer,” he stated. 

Meanwhile, the government is scaling up initiatives to revive coffee farming in regions such as Vihiga County. Speaking during a farmers’ sensitization forum at Ebukanga Polytechnic, CS Oparanya announced the distribution of free coffee seedlings. 

He revealed that national coffee production has declined to 50 tons annually, down from 200 tons recorded 25 years ago. To reverse this trend, the government has committed Sh8 billion to the Coffee Cherry Advance Revolving Fund (CCARF). 

Managed by the New Kenya Planters Cooperative Union (New KPCU), the fund offers smallholder farmers Kes 40 per kilogram in low-interest advances before their coffee is auctioned, supporting farm input purchases and household needs. 

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