MPs reject Peter Munya's decision to extend coffee broker licences

MPs have rejected a move by Agriculture Cabinet Secretary Peter Munya to extend existing licences for coffee brokers.

This is after the Select Committee on Delegated Legislation found that regulations aimed at extending the agents’ marketing licences by 12 months were illegal and unconstitutional.

The committee said the Crops (Coffee) (General) (Amendment) Regulations, 2021 had not been subjected to public participation, which is a constitutional requirement.

Its decision opens a new chapter in the fight for control of Kenya’s coffee trade after five co-operative societies in September petitioned lawmakers to be allowed into the market, and revocation of the existing licenses.

“Having examined the Crops (Coffee) (Amendment) Regulations, 2021…in line with the Constitution, the Interpretations and General Provisions Act (Cap 2), the Statutory Instruments Act, 2013 (No. 23 of 2013), the Crops Act (No.18 of 2013), pursuant to which they are made, the committee resolved to recommend to the House to annul the regulations in entirety for non-compliance with the Constitution and the relevant statutes,” said committee chairman and MP for Tiaty William Kamket.

The amendments were to give effect to section 40 of the Crops Act and sought to amend the Crops (Coffee) (General) Regulations, 2019 to make provision for the extension of the marketing licenses as at July 1, 2021 until June 30, 2022.

It is a major win for some of the five newly licensed brokerage firms owned by smallholder coffee societies, which had asked the National Assembly to declare unlawful a legal notice that had been issued by National Treasury Cabinet Secretary Ukur Yatani to amend the Coffee General Regulations to reinstate or extend marketing agents’ licences from July1, 2021 to June 30, 2022.

They said the amendment was neither subjected to public participation nor approved by the National Assembly and Senate.

Kamket said the amendment had also not been subjected to regulatory impact assessment. He said the regulations were inconsistent with section 40 of the Crops Act, which requires that the Cabinet secretary consult the Agriculture and Food Authority and county governments while making such regulations.

Their appeal to Parliament is the latest attempt to break into the coffee trading business, which has been dominated by marketing agents, oftentimes at the expense of farmers.

The petitioners said there was a new legal framework that abolished the marketing agents licence, providing for a coffee broker to carry out the marketing function.

Munya extended the coffee trading licenses after the end of the 2020-21 financial year on June 30, with the regulations compelling marketing agents to reapply afresh.

In September, officials of the newly licensed brokerage firms owned by smallholder coffee societies handed their petition to Murang’a Woman Rep Sabina Chege, seeking to compel the Nairobi Coffee Exchange (NCE) to admit them.

“I received a petition from representatives of Murang’a, Machackos, Kipkelion, Mount Elgon, Meru coffee unions under the National Coffee Federation of Kenya who have been granted coffee broker licences by the Capital Markets Authority as per the Capital Markets (Coffee Exchange) Regulations, 2020,” said Ms Chege in a Twitter post.

“NCE must admit the duly licensed brokerage firms with immediate effect in compliance with the law.”

The companies were United Eastern Kenya Coffee Marketing Company, Meru County Coffee Marketing Agency Ltd, Kipkelion Brokerage Company Ltd, Mt Elgon Coffee Marketing Agency and Muranga County Coffee Dealers Ltd.

dakure@standardmedia.co.ke