British charity Oxfam says the price of raw coffee exported from producer countries accounts for less than seven per cent of the eventual cost of coffee to Western consumers. When Nyeri Governor Nderitu Gachagua tried to organise the industry in Nyeri and bypass the cartels at NCE in the hope of selling coffee through direct sales, the cartels fought back viciously. They have no negotiating power, no knowledge and no responsibility over their crop.
By John Kamau
Caught between profit-seeking international coffee houses and their local networks’ search for cheap beans, Mr Wainaina is one of the few remaining prisoners of faith: He still believes that one day the government will end the international cartel that strangles the local coffee industry.
Kenya, through the blessings of soil, climate and passionate peasant farmers, produces one of the most valuable crops in the world.
However, through government inattention and corruption in the Coffee Board of Kenya, now renamed the Coffee Directorate, and the cooperative movement, a system of production has evolved that has destroyed the livelihood of farmers and enriched multinationals and their local networks.
“I love these trees,” he said at his Kabati farm in Murang’a County. “I will not uproot my coffee because I have faith that the government will listen to my plea. The cartels have to be disbanded, otherwise I’ll have no choice but to uproot (coffee trees).”
Mr Wainaina’s story is the story of coffee in Kenya. Thousands of farmers have abandoned what was once Kenya’s most important export.
“Since 1977 when I built my house, I haven’t been able to do anything for myself with the money I make from coffee. Because I make nothing! I can’t even afford to build a decent kitchen for my wife.”
What Mr Wainaina doesn’t know is that he is a victim of a conspiracy between regulators, millers, traders and brokers, who keep coffee prices down to increase their own profit margins.
British charity Oxfam says the price of raw coffee exported from producer countries accounts for less than seven per cent of the eventual cost of coffee to Western consumers.
The rest — over 90 per cent — goes to coffee processors and retailers in rich countries and their partners in the developing world.
Ironically, this set-up is supported by the Coffee Act that favors the brokers, millers and traders — frustrates any new entrant not associated with the network.
For instance Gusii farmers want to be auctioning their coffee at the NCE.
But they cannot afford the Sh1 billion bank guarantee demanded by the Coffee Directorate.
“It is not only us. There are several other unions that do not directly participate in the auction because of the enormous statutory fees requirement. We are thus forced to use agents,” said Mr Robert Mainya, the Gusii Coffee Farmers Union chief executive.
When Nyeri Governor Nderitu Gachagua tried to organize the industry in Nyeri and bypass the cartels at NCE in the hope of selling coffee through direct sales, the cartels fought back viciously.
“Immediately I started implementing these measures, war broke out,” he said.
He had hoped that by bypassing the Nairobi Coffee Exchange, farmers would get better pay since the cartels “dictate” the prices of the produce and are “not transparent”.
According to him, they also lower the grades of coffee so they can pay farmers less.
Some farmers in Othaya and Meru have managed to bypass the cartels by setting up their own mills and acquiring marketing licenses — albeit after a long struggle.
“Since the marketing agency is owned by the farmers, they will get competitive dollar rates. If we all mill together, we expect to benefit from lower tariffs. Buyers are also gaining confidence with Meru coffee hence we expect more direct sales,” says Mr Zablon Mbaabu, the chairman of Meru Farmers’ Co-operative.
Coffee farmers are the last class of economic slaves in Kenya.
They are tied by the law and regulations designed to favor processors, traders and marketers.
When they pick their coffee and take it to the factory, they lose control over their crop.
They have no negotiating power, no knowledge and no responsibility over their crop.
Other people — with a financial interest in the matter — decide the quantity and quality of the final product.
Today, after months of investigations, the Daily Nation exposes the shameful impoverishment of the Kenyan farmer and the damage it has done to the export sector.
We also start a campaign to demand from the Jubilee administration, a revolution of fairness to farmers, which should start with the destruction of the existing networks and the overhaul of the Coffee Act, culminating in the establishment of a transparent commodities exchange that ensures the farmer gets a fair price and the Kenyan economy the dollars it deserves.