By Kimuri Mwangi
The government has beaten a hasty retreat on a proposal to reallocate a chunk of the Coffee Cherry Fund to other subsectors including milk and cotton.
The Principal Secretary (PS) State Department for Co-operatives Mr. Patrick Kiburi Kilemi in a letter dated 22nd August 2024 had requested his counterpart at the Treasury to reallocate Kshs. 1.5 billion from the Coffee Cherry Funds.
In the proposed reallocation, grants were to be made to several organizations outside the coffee subsector. PAVI Cotton Ginnery (Headquarters) was to receive Kshs 150 million. Nandi milk factory (Kabiyet) was to receive Kshs 100 million while Narok milk factory (KCC) and Runyenjes milk factory (KCC) were to receive Kshs 150 million each. Women Cooperative Societies in Wajir, Mandera and Garissa Counties were proposed to receive Kshs 10 million per county totaling to Kshs 30 million.
The letter had also proposed grants to the New KPCU Dandora warehouse (Kshs 600 million), Kitutu Masaba coffee factory headquarters (Kshs 30 million) while coffee and milk cooperatives were to get Kshs 290 million.
The letter which was also circulating online caused uneasiness to coffee farmers some of them saying this was a calculated plot to divert and reduce money allocated to the coffee subsector.
Githunguri MP Gathoni Wamuchomba during an interview in one of the television stations in the country alleged that the diversion was “outright theft by the government”
In a rejoinder, Treasury PS Dr Chris Kiptoo in a statement to the media dated 14th September 2024 said that no funds have been diverted or misused from the Coffee Cherry Revolving Fund. While acknowledging that there was a proposal from the State Department for Cooperatives for the reallocation, Dr Kiptoo said that they had turned down the request.
“Upon careful review of the request and in strict adherence to the PFM Act and the National Treasury’s Circular No. 10/24 on Guidelines for Budget Implementation, the National Treasury declined the proposed reallocation. Section 43(1)(a) of the PFM Act prohibits the reallocation of funds that are earmarked for transfer to another government entity or person, which applies to the Coffee Cherry Revolving Fund. Additionally, Treasry circular No. 10/24 clearly stipulates that funds set aside for specific purposes cannot be reallocated without explicit approval,” says Dr. Chris Kiptoo.
The PS says the decision was communicated to the State Department for Cooperatives on 2nd September 2024 advising them that the Kshs.1.5 billion should remain dedicated to the Coffee Cherry Revolving Fund’s original purpose.
As per the Coffee Cherry Advance Revolving Fund Regulations 2020, you must be a Kenyan farmer registered with a Cooperative to access the funds. If you are an estate farmer, you must be growing coffee in an area below 20 acres. However, for estate farmers, they must have their coffee milled by New KPCU as it is the security for the funds they receive. For cooperatives, you don’t have to mill or market your coffee through New KPCU to qualify.
You can borrow up to Kshs. 20 per kilogram of cherry. However, you can also borrow at parchment level when the coffee has already been delivered to the mills where you qualify for 40% of the value of that coffee. The money is interest-free, but you pay an administration fee of 3% recovered before you get your money. The fund is administered by the New KPCU.
Statistics from New KPCU shows that as of 9th September 2024, almost Kshs 5.3 billion had been disbursed to 390,237 beneficiaries. Nyeri county leads with the highest disbursement of Kshs 746 million followed by Machakos where Kshs 615 million has been disbursed. Kiambu has gotten Kshs 587 million, Kirinyaga Kshs 572 million, Kericho Kshs 527 million, Muranga Kshs 494 million, Bungoma Kshs 392 million, Embu Kshs 333 million, Meru Kshs 274 million while Trans Nzoia completes the top ten with Kshs 243 million.
Kakamega County has the least beneficiaries of the fund with Kshs 170,780 disbursed so far.
