Revolution in coffee industry as auction goes digital

A coffee farmer from Othaya in Nyeri, inspects whether her coffee flowering is infected by a coffee blight disease. The disease is common during the heavy rainy season. [Kibata Kihu/Standard]

Coffee farmers might soon start reaping the fruit of their labour, with the produce’s trade going online.

In what could mark a turnaround in the ailing sector, trading at the Nairobi Coffee Exchange (NCE) has been opened to farmers at the grassroots, who will now be able to monitor performance of their produce in real time.

As reforms proposed by a special task-force appointed by President Uhuru Kenyatta start taking root, centres have been set up in coffee growing counties to enable farmers to be part of the marketing of the once lucrative crop.

The task-force was appointed in March 2016.

Modernisation of the NCE was one of the recommendations by the task-force, that was converted into an implementation agent of the reforms in October 2017.

As part of upgrading its operations, NCE has already installed monitors in Nyeri, Meru and Kericho counties, which will enable farmers to catch up with the latest happenings at the coffee auction.

One of the monitors has been placed at the Nyeri Farmers’ Co-operative Union on a trial basis, while another is at Kericho Farmers’ Co-operative Society, which will receive live streams from NCE hall located on the second floor of Wakulima House in Nairobi.

Once successful, the new system will be rolled out in coffee growing counties of Murang’a, Kiambu, Tharaka Nithi, Embu, Kirinyaga and Nakuru.

On the screen will be the serial number of the catalogue on sale at the exchange and companies competing to buy coffee through bidding.

In addition, coffee from each factory in the country, complete with a directorate code, will appear on the monitor to identify the parchment’s origin.

Gikanda Coffee Cooperative Society chairman Joseph Mukuha said farmers were looking forward to the new system to enable them monitor what would be happening in the produce’s trade.

“The process was vague and farmers would take anything they were told as gospel truth, but now they have an opportunity to participate in the trade. The opaqueness has now gone,” said Mr Mukuha.

He said once successfully implemented, wrangles among farmers would be a thing of the past, as they would be able to know the prices of their produce in advance instead of relying on millers and brokers.

NCE Chief Executive Officer Daniel Mbithi said the upgraded system would be launched later by Agriculture Cabinet Secretary Mwangi Kiunjuri.He said the system would allow participants to transact their contracts in real time and probably improve on pricing.

“Installation of the trading screens will relieve farmers and traders the challenges of travelling to the Nairobi auction hall to check the prices,” said Mbithi.

In an interview with The Standard, Mbithi said the advancement of the trading system was expected to enhance transparency and create more confidence among coffee growers.

According to Joseph Kieyah, chairman of the Implementation Committee on the task-force report, the upgrading system was taking place ahead of full modernisation of the exchange.

 Prof Kieyah said Sh203.5 million would be required to fully make the trading system a modern exchange commodity in the region.

The task-force report, Kieyah noted, had proposed that the NCE be upgraded to a fully-fledged commodity exchange under the Capital Markets Authority.

The auction, as a mode of selling coffee, had existed since 1934 and continued as the only channel of marketing Kenyan coffee until 2006 when direct sales (second window) was introduced.

About 85 per cent of the total production is sold through the auction managed by a Management Committee drawn from the coffee stakeholders.