The National Assembly Departmental Committee on Trade, Industry, and Cooperatives has called for a substantial increase in the budgetary allocation for the New Kenya Planters Cooperative Union (NKPCU). The Committee, chaired by James Gakuya, is urging Members of Parliament to allocate at least Kshs. 17.7 billion to ensure the optimal operation of the NKPCU.
Budget Breakdown and Needs
The NKPCU currently operates with a budget of Kshs. 4 billion. However, the Committee has highlighted the necessity for an additional Kshs. 15 billion to upscale payments to coffee farmers and another Kshs. 2.7 billion to modernize coffee warehouses across the country. Chairperson Gakuya emphasized the pressing need for modernization, especially the removal of asbestos from the nineteen warehouses, which poses significant health risks.
“Following the inspection tour, the Committee noted that there is a pressing need to modernize the nineteen warehouses yet to modernize, especially, the removal of asbestos, which is associated with health risks exposures,” stated Gakuya.
Inspection Tour Insights
During an inspection tour of all NKPCU-owned warehouses, the Committee identified a dire need for increased funding to streamline operations for the benefit of farmers. Gakuya’s Committee expressed concern that despite requesting additional funds, the current Kshs. 4 billion allocation for the coffee cherry fund to upscale payments to farmers has not been fully disbursed. So far, only Kshs. 500 million has been released, causing delays in increasing the payment from Kshs. 40 per kg of cherry to Kshs. 80 per kg.
“Delays in exchequer releases pose a challenge to the agency since coffee farmers are anticipating an increase in payment from Kshs. 40 per kg of cherry to Kshs. 80 per kg. The Committee observed that only Kshs. 500 million has been disbursed,” noted the Committee.
Modernization Strategy
The Committee recommended a revised approach to the modernization process, suggesting that NKPCU should prioritize completing one warehouse at a time instead of attempting to modernize multiple warehouses simultaneously. This strategy aims to streamline the modernization process and achieve more efficient results.
“This approach is proposed in view of the fact that the agency attempted to modernize multiple warehouses simultaneously, resulting in slow progress toward completion. By prioritizing one warehouse at a time, the agency can streamline the modernization process and achieve more efficient results,” the Committee stated.
Coffee Industry Reforms
The ongoing coffee reforms necessitate modern laboratory equipment for the NKPCU to compete with multinational companies and directly access international markets. The Committee noted the need for modern cupping facilities for each NKPCU mill branch. The report highlighted the NKPCU’s target to increase its production capacity from the current 3,018 tonnes to 20,000 tonnes by 2027.
Gakuya’s team warned that without full funding for facility modernization, it is unlikely that these targets will be met. The modernization process includes removing hazardous asbestos roofing, painting, floor works, and constructing boundary walls to improve security in NKPCU branches.
Transportation Challenges
The Committee also addressed the proximity challenges faced by coffee farmers who do not have a milling plant nearby, resulting in high transportation costs. The ongoing coffee reforms have expanded the NKPCU’s scope of operations, making its role in the coffee industry even more critical.
New KPCU is now involved in buying coffee from farmers, a role previously dominated by four multinational companies. This shift is expected to create competition and prevent the exploitation of coffee prices offered to farmers.
In conclusion, the Committee on Trade’s call for increased budgetary allocation to the NKPCU aims to modernize facilities, enhance farmer payments, and ensure the organization’s optimal operation, ultimately benefiting Kenya’s coffee industry and its farmers.
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