Relief for Kenyan farmers as Capital Markets Authority now moves in to tame coffee cartels

Coffee farming in Kenya. (Daily Nation)
  • Coffee trading in the country will now be regulated by the Capital Markets Authority (CMA).
  • The new regulations are contained in Coffee Exchange Regulations, 2020.
  •  Coffee trading companies will now be required to disseminate market information for every coffee auction and an analysis of performance on a daily, weekly and monthly basis.

Kenya’s Capital Markets Authority is the new sheriff in town and has moved in to crack down on coffee cartels.

Coffee trading in the country will now be regulated by the Capital Markets Authority (CMA).

According to draft regulations published by Treasury Secretary Ukur Yatani, coffee trading companies as well as the weekly commodity auction will now be regulated under the Capital Markets Act — a departure from the current situation where the operations are controlled under the Coffee (General) Regulations through the Agriculture and Food Authority’s Coffee Directorate.

“(The new regulations) will provide for the protection of the interests of the grower, the buyer and other stakeholders at an exchange,” Mr Yatani says in the draft Coffee Exchange Regulations, 2020.

Treasury believes the new changes would guarantee speedy and transparent payment of proceeds from sales. The changes to be effected through Section 12(1) of the Capital Markets Act would cover all key coffee trading functions, including licensing of brokers, establishment of companies trading in the commodity.

“The auction will no longer be under us as it has now been taken by the Capital Markets Authority,” Isabella Nkonge, the head of the Coffee Directorate, confirmed the changes, stating the directorate would continue regulating other aspects of coffee farming as the CMA takes over the trading function.

As per the new rules, officials will now be required to maintain a database for records of coffee sales at the auction floor and establish a linkage between the direct settlement system provider and licensed coffee warehouses to facilitate release of coffee to buyers or roasters upon payment.

Furthermore, coffee trading companies will be required to establish a direct link between their systems as well as software with the CMA’s in a move meant to boost transparency in their transactions. They will also be required to disseminate market information for every coffee auction and an analysis of performance on a daily, weekly and monthly basis.

Proceeds of the sale of coffee at the auction will be remitted by a coffee buyer or roaster through the direct payment system for onward settlement to the service providers with the net payment going to the grower.

JOIN OUR PULSE COMMUNITY!

Eyewitness? Submit your stories now via social or:

Email: news@pulselive.co.ke