Coffee Farmers Oppose Direct Settlement System, Fear Cooperative Collapse

In Summary

• Coffee farmers in Murang’a, Kirinyaga, and Nyeri oppose Direct Settlement System (DSS).
• DSS mandates direct mobile payments, bypassing cooperative societies.
• Farmers argue it threatens cooperative roles in inputs, training, and credit.
• Concerns include potential exploitation, debt repayment delays, and reduced farmer unity.
• Government softens stance after protests, with consultations ongoing.
• Stakeholders aim for consensus by September 2025 to balance reforms and stability.

Coffee farmers across Kenya’s key growing regions, including Murang’a, Kirinyaga, and Nyeri, have voiced strong opposition to the Direct Settlement System (DSS), a policy mandating direct mobile payments for coffee sales through the Nairobi Coffee Exchange (NCE). Introduced by Cooperatives Cabinet Secretary Wycliffe Oparanya in November 2024, the DSS aims to ensure prompt payments within five days, addressing chronic delays and middlemen exploitation. However, farmers argue it risks destabilizing the cooperative system critical to their operations.

At a July 2025 meeting in Murang’a, farmers from cooperatives like Marumi and Kahuhia expressed concerns that bypassing cooperatives could dismantle their support structures. “Cooperatives provide inputs, credit, and training. Direct payments leave us on our own, unable to afford these services,” said Peter Gikonyo, a Murang’a farmer. Cooperatives manage debts, with Kahuhia alone receiving Sh130 million via DSS in 2024/2025, but farmers fear direct payments could delay debt settlements.

The DSS, backed by the Capital Markets Authority and Cooperative Bank, has increased transparency, with farmers earning up to KSh 145 per kilogram in Kirinyaga. Yet, leaders like Cyrus Njogu of Kabare Cooperative warn that smallholders producing as little as 150 kg may face exploitation without cooperative oversight. “How will farmers with one kilogram open dollar accounts for payments?” asked Mureithi Maina of Irianini Cooperative in Nyeri.

The government softened its stance in July 2025 after protests, with Oparanya acknowledging implementation challenges. Governor Anne Waiguru’s stakeholder meeting in Kirinyaga on July 17 facilitated dialogue, with farmers like Joseph Gichoya lauding reforms but urging cooperative inclusion. “DSS can work if it complements, not replaces, our societies,” Gichoya said.

While the DSS has reduced payment delays—evidenced by KSh 27.6 billion earned from 535,941 bags sold between October 2024 and April 2025—farmers demand broader consultation. The Ministry plans further talks by September 2025 to refine the model, ensuring it supports the 600,000 smallholder farmers while maintaining cooperative sustainability.