Coffee auction remains suspended for third week, farmers hit

Coffee beans

Coffee beans on display for auction at the Nairobi Coffee Exchange on October 2, 2018.

Photo credit: Francis Nderitu | Nation Media Group

The operations of the weekly Nairobi Coffee Exchange (NCE) remain suspended for a third week running, dealing a blow to farmers amid confusion over trading permits.

There has been no trading at the auction since July 6, 2023, when the current marketing season resumed—meaning that farmers are stuck will pilling stocks of coffee they can’t sell.

“The auction resumed from recess on July 6 but there hasn’t been any trading for three weeks now. There was no trading on July 6, July 13 and even today July 20 all is silent” a source linked to the auction told Nation.

Industry players blamed the suspended auctions on the confusion caused by a government decision to suspend coffee brokerage and marketing licences pending reforms in coffee sales.

“The government had promised to extend existing marketing and brokerage permits by three months up to September through a gazette notice but that hasn’t happened. This means no trading can take place at the auction because all permits are affected” an industry insider said.

During the botched auction scheduled for July 6, three brokers delivered some 700 bags that could not trade.

The State last month moved to shake up the issuance of trade permits to various players in the coffee value chain.

Agriculture and Livestock Development Cabinet Secretary Mithika Linturi claimed that his ministry has noted potential conflicts of interest by some players in the coffee trading chain which required to be addressed.

“The Ministry has taken note of many players participating in the coffee trade along the coffee value chain, the different roles that they play from farm to cup, and the challenges that coffee farmers face as a result of probable existing conflicts of interests amongst the various categories of value chain players,” he said in a notice through the Agriculture and Food Authority.

“While it is noted that millers are licensed by the county government, brokers by the Capital Markets Authority, and buyers by the Agriculture and Food Authority’s Coffee Directorate, it is regrettably noted that provisions of the Crops(Coffee)(General) Regulations,2019 have not been adhered to in some cases by licensing authorities” the notice further said.

The notice came barely a week after a national coffee conference held in Meru where several politicians claimed that cartels had taken over the industry and exploited farmers.

“All licenses issued by different authorities run for a period of 12 months starting July 1 to June 30 of the succeeding year. Therefore, all existing licenses held by various coffee value chain players will expire on June 30, 2023” the ministry said.

“To this effect, and to streamline the licensing process to provisions of the Regulations, the Cabinet Secretary for Agriculture and Livestock Development hereby now directs that all interested persons wishing to deal in the coffee business must apply afresh for consideration by the relevant authority before or on June 30, 2023” it added.

Kenya’s coffee is much sought after by roasters and blenders and the country sells its coffee to the world market. The international prices are used as a benchmark for the local price at the NCE.

The sector is however limping and requires a revamp as more farmers abandoned the crop for better rewarding ventures such as real estate and avocado farming. The State is currently battling to curb the slump amid concerns that the once thriving coffee sub-sector had lost its shine, with production declining from 130,000 tonnes to an average of 40,000.