Farmers hit as auction of coffee remains suspended
Operations at the Nairobi Coffee Exchange (NCE) remain suspended for the fourth week running, casting more doubts over commitment by the government to revitalise the once top foreign exchange earner.
The auction interruption has led to accumulation of over 200,000 bags of clean coffee worth over Sh6.8 billion currently under the custody of major marketing agents. Marketing agents had through the Ministry of Agriculture requested for extension of their licenses to September 30, 2023. The companies got a big blow as the government declined the request subjecting them to more anguish.
“Yes, he declined extension and we are at a loss as to what to do with this coffee that was brought to us when our licenses were valid. We should have been given time to sell the coffee before the new rules come into force,” said a representative of a coffee marketing firm who declined to be named.
Trading permits
The suspension of the auction has hurt farmers’ fortunes amid confusion over issuance of trading permits by the government. Starting July 1, 2023 the coffee industry entered into a new regulatory regime with Capital Markets Authority (CMA) assuming the role of licensing coffee brokers as new marketing players at the NCE.
By the end of June 30, 2023, CMA had licensed 12 companies as coffee brokers, majority of which are firms registered by former giant district cooperative unions. Companies that have been marketing coffee as agents are yet to be licensed despite submitting their applications a few months ago.
”Our licenses as marketing agents expired on June 30, subsequently we applied for the brokers’ license but they are to be considered. We are holding huge quantities of clean coffee from small-scale farmers across the country. Our contractual obligation with the farmers is ending on September 30, 2023,” said a representative of a coffee miller who wished not to be quoted.
Agriculture and Food Authority (AFA Acting Director General Willis Audi confirmed in a phone interview yesterday that there are intensive consultations within the government over the same to ensure the industry is not disrupted.
“We have consulted widely to ensure every player is taken care off. Recently the AFA board resolved to renew the licenses of 76 coffee buyers and 12 warehousemen. The number of buyers is likely to increase as more applications continue to be processed. While county governments are expected to license millers and CMA to permit coffee brokers,” said Audi.
However, he declined to give details why the marketing agents who applied for broker licenses are yet to be served. CMA assumed the role of regulating the NCE after the enactment of the Capital Markets (Coffee Exchange) Regulations, 2020.
Attorney General Justin Muturi declined to extend the license of the marketing agents for three months as the latter had requested through the Ministry of Agriculture. Agriculture Cabinet Secretary Mithika Linturi on July 20, 2023 sought a legal opinion from the AG over the extension of coffee trade licenses and term of office of NCE management committee.
On July 25, AG in his reply to Mithika stated that his office noted that after reviewing the provisions of the existing legislation and regulations –Crops Act 2013 and Coffee (General) Regulations 2019, the minister has no power to issue an extension on licenses.
“We recommend for the renewal of the licenses that have lapsed pursuant to the provisions in the Act and the regulations. The licensees in the coffee sub-sector should renew their licenses in line with the procedures stipulated in the Crops Act 2013,” AG stated in his advisory to the CS.
He added, “Noting the other challenges faced in the coffee subsector and taking cognizance of the coffee reforms spearheaded by the office of DP we further recommend revocation of the NCE Trading Rules 2012 upon the expiry of the term of the NCE management committee to circumvent the conflict of laws arising from the operations of the NCE.”
Convene a meeting
Muturi urged the Ministry of Agriculture and CMA to convene a meeting to deliberate on the management of the NCE upon the expiry of the term of the committee in line with the CMA Coffee Exchange Regulations 2020. Implementation of the Capital Markets (Coffee Exchange) Regulations, 2020 received a lot of resistance by coffee marketing agents, millers and a section of key former government officials. Deputy President Rigathi Gachagua has stated that Kenya Kwanza administration is committed to fight cartels that have been manipulating coffee, tea and dairy farmers.
