New Kenya Planters Cooperative Union PLC (NKPCU)

While the Coffee Directorate sets the policies and regulations, the New Kenya Planters Cooperative Union PLC (NKPCU) is the critical government-owned commercial and financial backbone, providing direct, tangible services to the majority of Kenya’s coffee farmers.
Here is a breakdown of the NKPCU’s essential roles in the coffee value chain:
☕ The New KPCU PLC: Farmer-Centric Support and Services
The NKPCU was established in 2019 to replace the original KPCU, taking over the mandate of providing essential post-harvest and financial services to smallholder farmers, who produce approximately 75% of Kenya’s coffee.

1. Financial Empowerment: The Coffee Cherry Advance Fund (CCARF)
   This is arguably NKPCU’s most impactful role in recent years, designed to solve the long-standing problem of delayed payments to farmers.

• Mandate: NKPCU administers the Coffee Cherry Advance Revolving Fund (CCARF), a government-backed facility.
• Function: It provides farmers with affordable, readily accessible, and low-interest loans, often disbursed immediately upon delivery of coffee cherries to the factory.
• Impact: This crucial working capital helps farmers meet their immediate needs, such as school fees or farm expenses, rather than waiting months for their coffee to be milled, marketed, and sold. The advance can be as high as Kshs. 40 per kilogram of cherry in the initial disbursement, with potential for further advances at the parchment level.

1. Milling and Warehousing (The Processing Hub)
   NKPCU operates a network of processing facilities that are critical links between the farmer and the market.

• Milling: It operates licensed milling plants (in locations like Dandora, Sagana, Meru, and Tala) with the capacity to process huge volumes of coffee.
• Transparency: To build trust, NKPCU allows farmers to witness the milling of their coffee, ensuring transparency regarding the out-turn (the amount of clean coffee recovered).
• Warehousing: It manages expansive, strategically located warehouses for the safe storage of parchment coffee, ensuring quality is maintained until the coffee is moved to the auction.

1. Marketing and Market Access (The Broker Role)
   NKPCU acts as a licensed broker, ensuring farmers’ coffee reaches the best possible markets.

• Market Channels: It sells coffee through the two primary channels:
• The Nairobi Coffee Exchange (NCE) (the main auction).
• Direct Sales to international buyers, which is often crucial for securing premium prices outside the auction system.
• Farmer Focus: Its marketing services operate on a low-commission basis (2.5% on gross sales), with the specific goal of maximizing returns for the farmers.

1. Technical and Agronomy Support
   NKPCU also provides vital inputs and knowledge to boost on-farm productivity:

• Farm Input Subsidies: It helps facilitate government subsidy programs, providing farmers with quality seedlings and fertilizers at affordable prices.
• Extension Services: The union conducts training and sensitization programs with farmers and cooperative societies on modern, sustainable, and best-practice coffee farming techniques (agronomy support).
  In essence, the Coffee Directorate (under AFA) is the Policy and Regulatory arm of the government, while the NKPCU is the Commercial and Farmer Support arm, working to provide the tangible services and financial relief necessary to revitalize the sector.

By Kenya Coffee School and Barista Mtaani