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Coffee brokers take Munya to court in market war

BUSINESS
By Kamau Muthoni | Dec 16th 2021 | 3 min read
By Kamau Muthoni | December 16th 2021
BUSINESS

A section of farmers taken through live proceedings of Nairobi Coffee exchange at Nyeri farmers cooperative society buildings society union. [Kibata Kihu, Standard]

Coffee brokers have moved to court after being locked out of the auction.

The brokers claim that following reforms recommended by a coffee sector task force, licensing shifted from the Agriculture ministry to the Capital Markets Authority (CMA), which is under the National Treasury.

They say despite obtaining the licences from CMA, the Nairobi Coffee Exchange has locked them out on account that Agriculture Cabinet Secretary Peter Munya has not relegated his duties to any other agency.

The case has been filed by United Eastern Kenya Coffee Marketing Company Ltd, Murang’a County Coffee Dealers Company Ltd, Kipkelion Brokerage Company Ltd, Mount Elgon Coffee marketing Agency Ltd and the National Coffee Co-operative Union (NCPU).

NPCU chairman Francis Ngone said the task force appointed by President Uhuru Kenyatta in 2016 recommended the split of roles to ease bottlenecks.

He told Justice Anthony Ndung’u that the team report recommended that the county governments license coffee activities such as nurseries, milling, roasting and pulping.

National Treasury

But he argues that the sale of coffee through brokers at the exchange, and the exchange itself, would be regulated and licensed by CMA under the National Treasury.

Buyers, importers and sellers of coffee through direct sale would be licensed by the Agriculture and Food Authority (AFA) through the Coffee Directorate under the Ministry of Agriculture.

According to him, AFA issued a notice to inform stakeholders of the changes on June 11.

However, on June 29, Munya allegedly wrote to the commercial coffee millers and marketers saying he had not handed over coffee regulatory function to any other government agency.

“The said letter’s contents were contrary to provisions of the law as it alleged that coffee regulatory functions could be handed over by the first respondent as opposed to the law. It further misled coffee growers into believing that coffee marketing agents as licensed through revoked or repealed regulations could still function as coffee brokers,” said Ngone.

The letter, according to him, contradicts the earlier one by AFA, who had confirmed that the old licences would not be used under the new regulatory dispensation.

“I believe the impact of the said letter was to undermine the entire process by which regulatory reforms in the coffee sub-sector had been implemented.

“Additionally, the letter depicted a picture of a power struggle between government ministries and agencies at the expense of the ex-parte applicants’ economic activities and the interests of growers of coffee.”

The judge heard that Munya asserted that CMA cannot regulate coffee as it is not securities.

“The said opinion which was of a personal nature was the genesis of the first respondent’s (Munya) actions geared towards attempting to reverse the gains made to reform the coffee sector, which reforms had arisen from a Government policy document as opposed to a personal opinion,” claimed Ngone.

Munya and the Nairobi Coffee Exchange are yet to respond to the claims.

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