Price increase significantly following successful reforms
We have cracked it! The Cabinet Secretary for Cooperatives and MSMEs, Simon Chelugui, announced that the country’s coffee product has received significant attention from the global market. “After six months of hard work and unwavering commitment, today, we received the first set of good news from the Nairobi Coffee Exchange (NCE),” he said, adding, “The good news is that our coffee product has attracted big interest across the globe with some 32 companies now participating in the NCE translating to good prices.”
He said coffee farmers are the biggest beneficiaries as reasonable prices continue to be recorded at the coffee exchange.
“For instance, the price of Premium Coffee (AA) has risen from USD90 (Ksh13500) to USD350 (Ksh52500) per bag, which is a notable increase that shows the coffee reforms are working and benefiting farmers,” he said.
Mr Chelugui credited President William Ruto for initiating the reform process in the coffee sector and assigning Deputy President Rigathi Gachagua to spearhead the process. He emphasized that coffee is a key value chain in the Bottom Up Economic Transformation Agenda (BETA) and that the reform agenda puts a smile on the faces of the six million Kenyans who depend on coffee for a livelihood.
The CS urged farmers to return to their farms, stating that coffee is a lucrative crop. There is optimism that farmers who have suffered under unscrupulous profiteers for far too long will now benefit as the sector will regain its former glory as the country’s leading foreign exchange earner.
Before the Nairobi Coffee Exchange opened, the government had provided Ksh6.7 billion under the Coffee Cherry Fund for advance payment to farmers, increasing the payment from Ksh20 per kilo to Ksh80 per kilo of cherry delivered to the factories.
Nairobi Coffee Exchange Taskforce
Meanwhile, a task force was constituted that will see the Nairobi Coffee Exchange be placed under the ambit of the Capital Markets Authority(CMA).
This comes after a long tussle and lack of clarity regarding the mandate of the CMA and the Coffee Directorate as to who has the oversight over how to run the operations of the NCE.
The task force members were named in a gazette notice No. 16777 that set up a working committee on the Transition of the Nairobi Coffee Exchange into The Coffee Exchange Provided Under the Capital Markets (Coffee Exchange) Regulations 2020 And The Crops (Coffee) (General) Regulations, 2019.
Mr Chelugui, as the Chairperson of the National Steering Committee Board on Coffee Reforms, appointed a Working Committee to manage the transition of the Nairobi Coffee Exchange into the framework of coffee exchanges.
This Working Committee comprises Kenneth Gitonga, Peter Githinji Njuki, Augustus Kipkoech Chepkurwo, Amos Mamboleo, Irene Kabochi, Abraham Cheruiyot Korir, Roselyne Chepkirui, Jack Marrian and Job Kiumba.
The team will scrutinize and establish the incorporation, constitutive instruments, and legal ownership status of the Nairobi Coffee Exchange, determine the platform’s assets and liabilities, and develop a framework for translating the Nairobi Coffee Exchange into a coffee exchange compliant with the Capital Markets (Coffee Exchange) Regulations 2020 and the Crops (Coffee)(General) Regulations, 2019.
The committee will also guide the necessary dissolution or transition of the Nairobi Coffee Exchange, being a company limited by guarantee, into a company limited by shares in the names and for the benefit of the legal beneficiaries of the Nairobi Coffee Exchange.
It will also define the governance, institutional, and organizational structure of the transitioned Coffee Exchange, develop a comprehensive Human Resource Framework for the new coffee exchange, and develop and operationalize the direct settlement system for expedited and transparent payment of coffee sales proceeds.
The committee will also identify emerging technologies and other developments in the coffee sector that require legal and policy intervention and make appropriate policy and legislative proposals.
It will also facilitate the necessary applications to the CMA for approval to operate as a Coffee Exchange and develop a detailed action plan with timelines for implementing the results of the reviews and matters being considered by the Working Committee and the recommendations and strategies made to it.
The committee will oversee the management and operations of the Nairobi Coffee Exchange.
This committee will report to the CS, identify international and regional best practices in the management, oversight, strategic intent and operations of the coffee exchange, and consider and propose appropriate mechanisms for collaboration and cooperation among the institutions and entities operating within the framework of the coffee exchange; regulate its procedure; form thematic working groups, if necessary; hold such number of meetings in such places and at such times as the Working Committee members will consider necessary for the proper discharge of its functions; carry out or cause to be carried out such assessments, studies or research as may inform its mandate; hold consultations with stakeholders to solicit, receive, consider and collate inputs that may be useful for the performance of its mandate; and co-opt technical experts who possess relevant expertise, skills, and experiences as it deems necessary and proper.
The Working Committee will be in office for 12 months to 7 December 2024, with the possibility of an extension by the CS if necessary.
The Secretariat of the Working Committee shall be based at the Ministry Headquarters, Social Security House, Bishops Road, Nairobi.
To deepen coffee sub-sector reforms, the Capital Markets Authority (CMA) has licensed Kirinyaga Slopes Coffee Brokerage Company Limited as a coffee broker. The company’s promoter is the Kirinyaga County Cooperative Union, which comprises 14 cooperative societies. This brings the number of licensed coffee brokers to 14.
The other licensed coffee brokers are Meru County Coffee Marketing Agency Limited, Kipkelion Brokerage Company Limited, Murang’a County Coffee Dealers Limited, United Eastern Kenya Coffee Marketing Company Limited; Mt. Elgon Coffee Marketing Agency; Embu Coffee Farmers Marketing Agency Limited; Kinya Coffee Marketing Agency Limited; Alliance Berries Limited; Bungoma Union Marketing Agency Limited; New Kenya Planters Co-operative Union PLC (New KPCU); KCCE Marketing Agency Limited; Meru South Coffee Marketing Company Limited; and Baringo Kawa Brokerage Company Limited.
According to CMA Chief Executive Officer Wyckliffe Shamiah, the momentum of the reform agenda needs to be sustained to ensure full implementation of the Capital Markets (Coffee Exchange) Regulations. This will enable the marketing and trading mechanism at the Nairobi Coffee Exchange to be fair and transparent and enhance price discovery, all efforts geared towards adding value to the coffee farmers.
The Capital Markets Act was revised more than seven years ago to expressly provide CMA with the mandate to regulate spot commodity markets, including the coffee commodity market in Kenya. However, efforts to execute this legal provision have been met with stiff resistance from a section of players in the coffee sector and opposition from the parent ministry.
CMA has the legal instruments to regulate structured spot commodity markets, including the coffee commodity market, according to Section 11(3) of the Capital Markets Act.
The CMA’s oversight and duties include regulating and developing orderly, fair, and efficient capital markets in Kenya to promote market integrity and investor confidence. CMA also regulates the commodity markets and online forex trading
