Farmers win big in coffee trade rules

Farmers sort ourt coffee beans at Giakanja Coffee Factory in Nyeri in November last year. [Kibata Kihu, Standard]

Bidding at the coffee exchange has been hugely altered in the new proposed regulations aimed at benefiting farmers more.

Among the proposals is the withdrawal of any batch presented for sale if the reserve price is not met.

Previously, bidders would negotiate with the millers outside the bidding process to create huge opportunities for price manipulation at the expense of farmers.

Should the bidding fail to reach the reserve price at any given auction, then the beans would be presented in the subsequent process in a law expected to enhance price competitiveness.

This is among a raft of proposed changes in the coffee value chain, where such weaknesses have for long been exploited to mint huge profits by a few players.

“…where the disclosure of the reserve price does not attract any competitive offers, the coffee shall be withdrawn and offered at a subsequent auction,” the proposed rules read in part. Others proposals include a tighter licensing regime for all players, which is intended to curb theft of coffee beans from storage facilities, including farmers’ cooperatives and mills.

However, the new proposed licensing regime is already facing stiff objection from some stakeholders who term it unnecessary bureaucracy.

Collusion between millers and bidders at the Nairobi Coffee Exchange has for long been blamed for the poor prices the beans fetch.

Any price manipulation would compound the impact of the falling international prices, which have been dipping to levels last seen in December 2013, partly owing to a supply glut.

Historical aspects of the trade have handed multinationals near-full control of the coffee value chain, starting with the creation of rules that direct how farmers grow their crop and whom they sell it to.

Kenyan producers had even suggested to the Coffee Task Force to consider the possibility of demanding that buyers indicate the proportion of their produce when blended with the inferior beans from other countries.

While it was found to be impossible to enforce the proposal, it had the ability to yield better profits for local farmers, considering that their beans are highly sought after.

Kenyan coffee is used to enrich other inferior brands globally.

Agriculture Cabinet Secretary Mwangi Kiunjuri recently presented the draft regulations to the National Assembly that also recommend the establishment of a cherry revolving fund.