Chaos as coffee auction shut for fourth week in row
Coffee beans on display for auction at the Nairobi Coffee Exchange on October 2, 2018.
Operations of the weekly Nairobi Coffee Exchange (NCE) remain suspended for the fourth week running, hurting farmers’ fortunes amid confusion over issuance of trading permits by the government.
A spot check by the Nation revealed that an auction scheduled for Tuesday, July 25 did not take place—dealing a blow to growers, millers, and coffee buyers. There has been no auction since July 6, 2023, when the current marketing season resumed—meaning that farmers are stuck will pilling stocks of beans they can’t dispose of while millers have also been hit.
“If no coffee samples get to the auction sample room on Thursday, July 27 then it means there will be no trading until at least August 8,” a source linked to the auction said.
“There are currently only about 410 bags of coffee in the sample room which had been delivered in anticipation of the failed auctions. A broker had promised to deliver 300 bags to the sample room but later held back,” the source added.
Industry players have linked the auction chaos to the government’s decision to suspend coffee buyers and marketing licences pending reforms in the crop’s value chain. Deputy President Rigathi Gachagua is spearheading coffee reforms.
“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 told Nation last week.
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 had noted potential conflicts of interest by some players in the coffee trading chain, which need 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 directive came a week after a national coffee conference held in Meru where several politicians claimed that cartels had taken over the industry and reaped handsomely where they did not sow.
“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 ditched 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.
