Nairobi Coffee Exchange resumes operations under new guidelines aimed at boosting farmer incomes
KENYA – The Nairobi Coffee Exchange (NCE) auction has resumed operations, a month after it was suspended, to allow for reforms aimed at boosting incomes for coffee farmers.
Under the new guidelines, farmers will be allowed to sell their coffee directly through the auction, a move which the government hopes will cut off the brokers blamed for profiteering.
Co-operative Bank has been appointed by the NCE to provide the Direct Settlement System (DSS) technology platform, on which coffee trading will henceforth be conducted.
The auction will also be supervised by the Capital Markets Authority as part of the new measures aimed at increasing transparency at the auction.
Ahead of the auction resumption, aforum to train the coffee market users, which includes brokers, traders, warehousemen, coffee farmers and other service providers, on the workings of DSS, was held in Nairobi.
So far, 11 coffee co-operative unions have been licensed to sell coffee directly at the exchange and overseas, thereby eliminating the need for middlemen between the farmer and the buyer.
Five other unions will be licensed before end of August bringing the total number of licensed farmer-owned coffee brokerage companies to 16, according to Cooperatives Principal Secretary Patrick Kilemi.
County governments, CMA and Agriculture and Food Authority will license milling, brokers and buyers respectively, according to Kilemi.
By having three distinct licensing authorities, there will be checks and balances along the value chain for the best interest of the farmers, the PS noted.
He further explained that the government was working on a modality jointly with County Governments and Capital Markets Authority on registration of Small, Medium and Large Estates into Co-operatives or Associations to enable these categories of farmers also access brokerage licenses.
Coffee in Kenya is produced under two farming systems; smallholder estimated at 700,000 growers and large, medium and small estates estimated at 3,000 in number.
The smallholder producers are clustered into 559 active coffee cooperative societies that own and operate 1,065 wet mills where they process and market their coffee collectively; the estates operate 2,132 wet mills.
The government has committed to support production of coffee from the current 51,000 metric tonnes to 81,000 metric tonnes by 2024 and progressively to 260,000 tonnes by 2027.
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