Where Cherries Bring No Cheer

Thursday, March 9, 2006

Editor: What is the issue most responsible for the problem here: the lack of loans available to farmer co-ops? The excessive number of microloans made with no accompanying support system of skills training? Or the continued farming coffee, a plentiful (often oversupplied) crop that fetches a low sales price?

Muchemi Wachira

A farmer picks her coffee. Although the Government has written off a Sh5.8 billion debt owed by the sector, many farmers are still reeling under debt and have called for reforms in the loan system.

Coffee berries may be about to ripen again but few farmers have a reason to smile.

Even after the Government waived a Sh5.8 billion debt that had bogged down the sub-sector, farmers still have no money in their pockets and their prospects are yet to improve.

They have no streamlined loan access schemes and many have resorted to imprudent borrowing. The result has been that when bonuses are paid out, many are left without an income as their earnings are gobbled up by marketing agents and financial institutions who gave credit to the farmers on the strength of their expected income.

“The advances growers receive could have an adverse effect on co-operative societies,” the central provincial cooperative officer, Mr Geoffrey Karuku said.

These loans are not good. They are only for solving short-term problems but finally they may end up creating more problems as the societies will apparently be left in crisis, he added. In the past, the Cooperative Bank of Kenya used to give loans to the co-operatives but it stopped after most failed to service their loans.

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Source: The Nation (Nairobi) (link opens in a new window)