Kenyan coffee brokers challenge new capital market regulations in court
KENYA – A group of Kenyan coffee brokers has filed a lawsuit seeking to block the implementation of the new Capital Market (Coffee) Regulations 2024, which will reduce their auction commission from two percent to one percent.
The brokers—Alliance Berries Limited, United Eastern Kenya Coffee Marketing Company Limited, Coffee Estate Bourgeoisie, Brokers Agency Limited, and Minnesota Coffee Marketers—claim that the regulations were passed without public participation and will negatively impact the coffee trade.
The court heard that under the previous arrangement, brokers received a two percent agency fee from gross sales, paid in U.S. dollars.
However, the new regulations set the brokerage fee at one percent, while introducing additional charges: a 0.3 percent coffee exchange fee, a 0.2 percent Capital Markets Authority (CMA) statutory fee, and a direct settlement system provider fee.
The brokers, represented by Teddy and Company Advocates, argued that the government failed to consider existing contracts between them and coffee farmers.
They further contended that the National Treasury Cabinet Secretary (CS), the Attorney General, the CMA, and the Nairobi Coffee Exchange (NCE) unlawfully introduced these fees without Parliament’s approval.
According to their representative, Peter Githinji, the implementation of these new charges will disrupt the coffee market.
“Without any public participation or engagement with stakeholders, the first respondent (CS) published the Capital Markets (Coffee Exchange Fee) Regulations 2024,” Githinji told the court.
He warned that the changes could lead to brokers losing contracts and facing legal disputes with farmers seeking compensation for the additional deductions from their earnings.
Despite the legal challenge, coffee trading at the Nairobi Coffee Exchange (NCE) saw an increase this week. The volume of coffee traded rose by 10 percent, generating Kes 2.1 billion for farmers and estates.
In Sale 19 of the current coffee year, a total of 37,105 bags were auctioned, up from 33,673 bags sold the previous week.
However, the average price per 50-kilogram bag fell by six percent to Kes 47,038, down from Kes 49,766 in the last sale. This translates to an average price of Kes 935.6 per kilogram of clean coffee, with farmers expected to receive Kes 115 per kilogram.
NCE Chief Executive Officer Lisper Ndung’u noted that Kenyan coffee continues to attract strong demand in global markets despite price fluctuations.
“This auction reinforces the strength of Kenya’s coffee sector. The demand for our high-quality beans remains strong, but we must continue improving quality and market access to ensure farmers receive the best value for their produce,” Ndung’u said.
She emphasized the need for transparency and direct market linkages to strengthen Kenya’s coffee trade and urged farmers to focus on producing high-quality coffee to attract premium buyers.
Sign up HERE to receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.
