Kenya's Cooperatives Need Stronger Records to Protect Farmers' Earnings

In a column published by Business Daily on 12 October, Patrick Kilemi, principal secretary in the State Department for Co-operatives, argued that producer groups need reliable buyers, current market information, finance and better processing to help farmers operate as businesses.

Kilemi said Kenya has about 7.5 million farmers registered in the Kenya Integrated Agriculture Management Information System. He also cited imports worth about KSh316B in 2025 across five categories: wheat, rice, maize, sugar, and animal and vegetable fats and oils. These are figures cited by the principal secretary. They point to potential demand for local produce, but farmers can only serve it when they know what buyers need, meet quality standards and can deliver on time.

Plan sales before production

A cooperative can help members reduce uncertainty by collecting buyer orders and sharing information about prices, grades, quantities and delivery dates before planting. Without that information, farmers may invest in crops that are difficult to sell or expensive to transport. A shared marketing plan can also help small producers negotiate with larger buyers and divide the cost of storage, transport, testing and packaging.

Collective selling only works when members trust how produce is weighed, graded and paid for. A cooperative needs clear delivery records, a consistent way to calculate deductions and a documented process for resolving disputes. Members should be able to trace each payment back to the amount and grade of produce they supplied. Weak records make it harder to identify losses and can turn routine disagreements into lasting conflicts.

Kilemi said a recent cooperative assessment found that producer cooperatives had limited access to current market information. He noted that the full assessment was still due to be released, so the claim cannot yet be checked against the complete report. It nevertheless highlights a practical need for cooperatives to share timely information before farmers commit money and labour to a crop.

Keep accounts that members can check

The Ministry of Co-operatives' audit guidance says registered societies must keep proper accounts, arrange an audit at least once each financial year and file annual returns with audited accounts within four months of year-end. The rules help members see what the organisation owns, what it owes, what it has paid and whether money has been used for an approved purpose.

Accounts should record produce received from each member, sales to buyers, payments due, operating costs, stock in storage and any advances or loans. Managers should reconcile bank statements against the books and make sure the people approving a payment are not the only people checking it. Boards should review overdue buyer payments and member loans, then explain significant changes in the accounts at general meetings.

The wider cooperative finance sector shows why financial discipline matters. The Sacco Societies Regulatory Authority's 2025 supervision report says assets across regulated SACCOs reached KSh1.21T in 2025, up from KSh1.076T in 2024. Deposits rose to KSh832.74B from KSh749.43B, while gross loans increased to KSh948.67B from KSh845.11B.

These figures relate to regulated SACCOs, not every agricultural producer cooperative, and the groups should not be treated as identical.

As deposits and lending grow, boards need to check whether borrowers can repay and whether cash will be available when members request payments. A cooperative can face pressure if buyer invoices remain unpaid, if it borrows for projects that take years to earn money, or if members' deductions are not remitted on time. A budget should test what happens when sales fall, harvests are poor or costs rise, rather than rely only on the best-case forecast.

Manage weather and investment risks

Agriculture also exposes members to weather, disease, price and transport risks. Depending on the crop and location, a cooperative may consider suitable insurance, water harvesting, safe storage, several buyers and staggered sales. These measures cannot prevent every loss, but they can reduce dependence on one harvest, one buyer or one selling date.

Processing and branding can help members earn more from each unit sold, but buildings and equipment should be backed by a credible business plan. Before investing, the cooperative needs to know whether members can supply enough produce, whether buyers want the finished product, what running costs will be and how any borrowing will be repaid. Professional management and clear approval rules help prevent an ambitious project from draining funds needed for day-to-day payments.

Mwenendo's report on tea factories releasing farmers' September payments and bonuses shows why clear payment information matters to farm households. Members need to know what they delivered, what deductions were made and when the balance will reach their accounts.

Questions members should ask

Members should check whether accounts are audited on time, whether the board explains large purchases and borrowing, whether payment records match produce deliveries and whether overdue debts are disclosed. They should also ask if the cooperative relies too heavily on one crop, buyer, lender or manager.

A strong cooperative is not simply the one with the largest building or loan book. It is one that can show members where their money went, explain the risks it has taken and demonstrate that sales are turning into timely, fairly calculated payments. Better records cannot guarantee a good harvest or a high price, but they make avoidable losses harder to hide.