The Capital Markets Authority (CMA) will now regulate coffee trade, in what the Treasury calls fight against cartels who have affected price downwards.
According to draft regulations by Treasury cabinet secretary Ukur Yatani, all coffee trading companies and weekly coffee auction will be under the watch of CMA.
Currently, the market is regulated by the Agriculture and Food Authority through the Coffee Directorate under Coffee (General) Regulations.
The government will also establish a direct settlement system to prevent brokers from diverting sales proceeds to other purposes.
All other activities related to coffee trading including licencing of brokers and establishment of companies will be handled by the CMA.
“The regulations will provide for the protection of interests of the grower, the buyer and other stakeholders at an exchange,” noted Yatani.
Coffee trading companies will be required to establish a direct link between their systems as well as software with CMA’s in a bid to boost transparency in transactions.
They will also submit a daily,weekly and monthly reports regarding performance of coffee auction.
The Coffee Directorate, according to its head Isabella Nkonge, will now manage other aspects of coffee farming.
“The auction will no longer be under us as it has now been taken by the Capital Markets Authority,” she said.
Coffee production in Kenya has gone down from 130,000 tonnes in 1988 to 45,000 tonnes during the 2016/17 season attributed to a large number of farmers who have stopped farming coffee.
In 2015, President Uhuru Kenyatta appointed a 19-member National Task Force on Coffee Sub-Sector Reforms to investigate problems in the coffee sector. However, the task force hasn’t been able to make major strides with residents in Central Kenya still reporting cases of coffee theft every month.
Nyeri County alone loses more than Ksh100 million annually to cartels masquerading as common thieves who raid factories at night.
In 2016, the President established the Coffee Sector Implementation Committee meant to align the sector’s regulations with the Constitution, the Crops Act and the functions of the county government so as to provide protection of the growers’ rights along the entire value chain. Similarly, little has been achieved through this.
In August, thieves made away with Ksh2.6 million coffee berries from Kianderi Coffee Factory in Kahuro subcounty, Murang’a.