Private coffee millers troop back to Nairobi auction

Coffee farmer Elijah Lugali Ayida attends to his crop at his farm at Lodenyo village in Vihiga County on October 24, 2023. [Benjamin Sakwa, Standard]

Stakeholders in the coffee value chain who shunned the Nairobi Coffee Exchange (NCE) last month have made a comeback boosting the value of the produce.

On Tuesday, the value of coffee traded in the exchange rose from USD1.3 million (Sh195,520,000.00) to USD2.8 million (Sh421,120,000) in what NCE Chairperson Peter Gikonyo described as 'impressive'.

The volumes of bags traded at the exchange increased from 6,000 to 11,159 which was the highest received from the brokerage firms since the new regulations were implemented on August 15.

Gikonyo attributed the good performance to the participation of the large multinationals. He exuded confidence that more coffee would continue to be released at the auction.

In the dealers' summary release dubbed 'sake 2 of October 24, Ibero Kenya, one of the private entities that had not been participating in the auction had 3006 bags (the highest bags traded) weighing 184,708 kilograms valued at Sh110,471,600.45.

Other multinational brokerage firms were Taylor Winch (1,682 bags), Kenyacof Limited (1,511 bags) Sasini (900 bags), C Doman Limited (232 bags) among others.

According to stakeholders in the coffee value chain, this is the first time players in the sector went back into the auction without the government halting the implementation of the reforms.

"The reforms were initiated in 2019 by the former administration but at some point, the government backed down and that is what led to smooth operations in the auctions," National Coffee Cooperative (Naccu) Chairman Francis Ngone said.

Ngone said this was a major breakthrough in the government-backed reforms that will see farmers enjoy the fruits of their sweat after many years of waiting.

He was optimistic that other giant buyers would continue participating in the auction.

"In as much as we have registered major progress in the auction, we hope that the real giants will join the auction next week. Out of 75 registered buyers only five participate in the auction," he said.

Nyeri County Assembly Speaker James Gichuhi, a large-scale coffee farmer, said it was not a coincidence that more coffee was traded in the auction at a time when Cabinet approved Sh4 billion to cushion the farmers. These were additional funds to the Sh3 billion released earlier according to the Cabinet dispatch.

On October 13, the Cabinet approved the funds to ensure that farmers earn Sh80 for a kilogramme of cherry from the current Sh20 a kilogramme as an advance payment.

"The move shows the State-backed reforms have started taking shape and the future looks bright for the farmers," Gichuhi said.

However, Commercial Coffee Millers and Marketing Agencies Association (CCMMAA) Chairman James Muriithi said that they kept off the auction as there was adequate produce in the market. The association brings together seven private millers and marketers.

"We were denied milling and brokerage licenses but our licenses for buying are active that is why we are back in the auction," he said.

However, Deputy President Rigathi Gachagua attributed the 'impressive performance at the auction' to the State's interventions saying they have foiled plans by 'cartels' to frustrate reforms in the agricultural sector.

"They have been buying the produce at a low price, sell at high prices and retain all the profits. We have been asking them to share the profits but they are opposed to it. Instead, they conspired to boycott Kenyan coffee, creating an artificial crisis in an attempt to coerce the government into abandoning the reforms, but they have failed," Gachagua said.

He maintained that the government's decision to pay coffee farmers an advance of Sh4 billion and invite global coffee dealers to directly buy the local produce are some of the moves that have thwarted the plans of the cartels.

On Monday, Gachagua announced that the government held talks with US coffee chain Starbucks Corporation for the US government-backed deal midwifed by American Ambassador to Kenya Meg Whitman.

"The ambassador has planned coffee buyers in America called Starbucks to meet with the President so that they can be buying our coffee directly," he said.

Last month the government formed a multi-agency team to verify the stock of coffee parchment held by private millers, the largest stakeholders in the sector.

The multi-agency team comprising officers from the Directorate of Criminal Investigation, National Intelligence Service and National Government Administration Officers found that the private firms had over 100,000 bags of coffee.

The private miller's association chairman would later announce that they had been forced to shut doors and the fate of over 800 workers hung in the balance.

"We have made investments worth USD65 million in the country translating into Sh9.5 billion while we have 7000 hectares that we own and manage at a cost of over USD200 billion which is Sh3 trillion," he said in a past phone interview.