The coffee industry in Kenya used to be regulated and controlled by the government before it was liberalized in the 1990s, following pressure from the International Monetary Fund (IMF).
Before its liberalization, the government regulated the sector through the Coffee Board of Kenya (CBK), the Kenya Planters’ Co-operative Union (KPCU), among other key stakeholders whose operations were controlled by the government to enhance efficiency in the sector.
Under the arrangement, coffee producers benefitted from three payment categories, including advances, credit/vouchers, and cash on their coffee produce.
During that regime, small-holder coffee producers enjoyed high prices for their produce since they adhered to strict Government-monitored coffee production regulations, translating to the production of high-quality premium coffee in the market.
However, things worsened when what started as a bubble in the cup of coffee turned out to be a brewing storm following the sector’s liberalization through the enactment of the Coffee Act No. 9 of 2001, which the majority of the sector’s players misinterpreted to mean free market.
The liberalization perception has prompted many of the sector’s players to view coffee like any other crop, such as sugarcane, maize, and tea, among others.
Liberalization dealt many coffee producers a severe blow since a majority of them got confused about what to do under such circumstances, especially in the absence of Government-backed advisory and expertise support.
Since then, various industry experts have come out with divergent views on the way forward amid the coffee liberalization storm.
For some quarter, the government of that time has been slapped with blame for making unpopular decisions without conducting feasibility studies to ascertain the impact liberalization would have on the future performance of the coffee sector in Kenya.
In essence, liberalization meant small-holder coffee growers could no longer have control and regulate their own produce following the introduction of marketing agents and coffee millers in the value chain, who, to date, continue controlling the sector.
Liberalization ushered in the era of mushrooming marketing agents and coffee mills, among other players whose presence continues to compromise coffee prices and production.
It is worth noting that the marketing agents come in after a small-holder has grown coffee, milled, graded and classified it, only for the agent to provide information about the coffee and claims between 2 to 3 percent of the gross sales, which is explicitly exploitative to the farmer.
Worse still, the marketing agents are the first beneficiaries from the coffee sales. They are first paid as the money passes through them yet the farmers wait for months for the same.
Listening to small-holder coffee producers at the co-operative societies level, there is no doubt that their feelings are that liberalization of the coffee subsector was aimed at reversing the already declining coffee production to boost incomes among the millions of people whose livelihood depends on coffee.
Besides improving the coffee producers’ household incomes, the liberalization was meant to facilitate increased foreign exchange earnings for the country.
They argue that liberalization deprived small-holder coffee producers of Government-sponsored field extension services leading to poor quality coffee production due to a lack of extension information services on modern crop husbandry practices.
They claim that the removal of monopolies in the coffee sector has led to an increase in illegal coffee trade syndicates and theft because of unregulated market competition.
There is a universal opinion from coffee producers that the national government, through the Coffee Board of Kenya, needs to recover its lost glory and enhance its visibility in the coffee-producing zones.
This means more information flow from CBK to the farmers, particularly regarding coffee milling yields, grading, classification, and negotiating marketing contracts.
The aforesaid initiatives will only be achieved through direct contact with the farmers; extension services should be revived and improved to ensure the production of high-quality coffee.
Another aspect coming out from the farmers is the demand for a timely and regular payment to them and the provision of low-priced or subsidized farm inputs to ease the burden of high production costs on the farmers.