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Kenya to disburse 10 mln USD in loans to coffee farmers

Xinhua, November 1, 2016 Adjust font size:

Kenya plans to disburse 10 million U.S. dollars to small scale coffee farmers in order to boost production of the cash crop, an official said Tuesday.

The managing trustee of the state-owned Commodities Fund, Nancy Cheruiyot, told Xinhua that the disbursements will be in the form of concessional loans to help farmers access inputs at the right time.

"Due to the nature of the coffee harvesting cycle, commercial banks shy away from lending to coffee farmers and so government assistance is required to bridge the financing deficit," Cheruiyot said.

The fund is a revolving one that depends on loan repayments to make further loans to farmers, according to the official.

Coffee farmers normally have to wait for eight months to be paid after the delivery of coffee to the factory.

In addition, coffee is only harvested twice a year unlike tea which is harvested every month.

"As a result, coffee farmers have cash flow problems due to the long time they have to wait for payment," Cheruiyot said.

Since 2007, the fund has disbursed 26 million dollars to over 100,000 small scale coffee farmers. The loans normally attract an interest rate of between five and ten percent annually.

A multi-agency team recently conducted a study which showed that coffee farmers need at least 30 million dollars annually in loans in order to sustain the sector's needs.

"So we are hoping government will provide additional funds required to expand the size of the revolving fund," Cheruiyot said.

Cheruiyot said that another challenge facing small scale coffee farmers was the fluctuating coffee prices.

"During periods of low prices, farmers fail to reinvest in their cropping resulting in lower production in the next season," she said.

Government data indicates that only five percent of Kenya's coffee production is consumed locally.

"We are partnering with other stakeholders to roll out a national wide campaign to encourage more domestic consumption of locally produced coffee," Cheruiyot said. Endit