Coffee unions, through their umbrella body—the National Coffee Cooperative Union (NACCU)—are urging the government to postpone the enforcement of a directive that mandates direct payment of coffee proceeds into farmers’ personal bank accounts. They are calling for the plan, set to take effect in July 2025, to be delayed until June 2026 to allow time for further consultations and system improvements.
NACCU warns that the current gaps in implementation could expose both farmers and co-operative societies to financial risks. While they support the government’s broader coffee sector reforms, they argue that moving too quickly could result in unintended consequences.
The directive, issued on April 17, 2025, by the Ministry of Co-operatives, Micro, Small and Medium Enterprises (MSME) Development, aims to route all payments from the Nairobi Coffee Exchange directly to farmers, bypassing the traditional cooperative channels. However, NACCU has raised several concerns about this approach.
One major issue is the outstanding debts within the coffee value chain. Many farmers owe money to societies and SACCOs, while societies and unions have their own financial obligations. NACCU Chairman Francis Ngone warned in a letter to CS Wycliffe Oparanya that implementing the directive without resolving these debt issues could lead to a spike in non-performing loans—unless a debt write-off is ensured.
Another concern involves incomplete farmer data. Many cooperatives have not finalized the verification of key records such as bank details, ID numbers, and contact information. Additionally, a significant number of farmers—especially in rural or marginalized areas—do not own bank or SACCO accounts.
NACCU also highlighted low financial literacy among farmers, which could hinder the smooth transition to the direct payment model. They recommend that farmers receive proper training in budgeting, digital banking, and financial management.
The union is also seeking clarification on several aspects of the new payment system, including payment frequency, foreign exchange conversions, and the distribution of new levies in the coffee marketing chain. Under the revised levy structure, charges now include 1% for brokers, 0.2% for the Capital Markets Authority, 0.3% for the Nairobi Coffee Exchange, and 0.3% for the Direct Settlement System (DSS). Previously, brokers were charged a flat rate of 1.8%.
Ngone noted that many unions now own brokerage firms and stand to lose income under the revised levy system. He called for a more equitable redistribution model that fairly compensates all service providers while remaining transparent about how these levies benefit farmers directly.
He emphasized the need for a balanced approach that respects the roles of all stakeholders, recommending a one-year extension to allow for data cleaning, opening of accounts, and financial education.
Ngone also stressed the importance of safeguarding the DSS platform from politicization and reiterated NACCU’s support for inclusive, transparent, and farmer-focused reforms.
The government’s recent interventions in the coffee sector—such as boosting the Cherry Advance Revolving Fund to Sh6.7 billion and launching the DSS through the Co-operative Bank—have been positively received for improving farmer payouts and addressing payment delays.
