New coffee dealers list stirs up storm in Kenya

Simon Kimaru picks coffee in his farm at Ngamwa Village in Mukurwe-ini, Nyeri County last month. A storm is brewing in the coffee sector following the publication of a new list of companies allowed to trade in the cash crop. (PHOTO: KIBATA KIHU/ STANDARD)

A storm is brewing in the coffee sector following the publication of a new list of companies allowed to trade in the cash crop.

Of concern to farmers is the exclusion of their organisations as well as their umbrella body, the Kenya Planters Co-operative Union (KPCU) from the "black gold" trade.

In a move that has infuriated farmers, the Agriculture and Food Authority's Coffee Directorate has issued firm instructions that dealers not in the list should not be allowed at the Coffee Exchange.

The new list has ignored recommendations of the Presidential Task Force report on Coffee Reforms, just days after an implementation committee was gazetted last week.

According to the list seen by The Standard, only 45 dealers will be allowed to trade in the crop while only eight millers have been licensed to continue with their work.

The directorate has also licensed three management agents, six growers marketers, 13 warehousing companies, four commercial warehousing and six commercial marketing agents.

The timing of the listing has raised eyebrows from farmers who have questioned the rush in publishing it while there are several cases pending in court.

In the circular by the Coffee Regulator to the Nairobi Stock Exchange, those with valid licences were notified through emails to the 214 market players late last week.

In a development that has caused uproar from market players, those without licences will now be barred from participating in the trade of the lucrative crop.

"In essence, if you are not on the list then presumably you can't do coffee business in Kenya. For all intents and purposes, this reinforces the entrenched cartel and locks out farmers-owned companies such as KPCU, " said an angry William Gatei, the chair of Kenya Planters Cooperative Union.

"It is also being done at a time when there are several court cases pending regarding the licensing powers and the implementation of the Presidential Task Force on Coffee Reforms report," added Mr Gatei, who warned that farmers will be biggest losers in the move.

In the list, several multinational companies have been licensed across the value chain, which some players say is unlawful, even under the expired regulations.

Yesterday, Gatei insisted that Article 40 of the Constitution, which spells out protection of right to property, should be respected by the coffee regulators.

"We must allow farmers to sell their crop after working hard on farms without imposing hurdles on the peasants. We have seen them uprooting plants but we are still not resolving their issues," he said.

KPCU Managing Director Joseph Kioko accused the Coffee Directorate of ignoring recommendations that were spelled out by the task force.

"The new list maintains a status quo, which is what farmers have been fighting because brokers now enjoy the sweat of farmers without passing over benefits to them," said Mr Kioko.

In the coffee growing areas of Mt Kenya, farmers were angry at the move, saying that it was against their task force's recommendation.

Gikanda Coffee Co-operative chairman James Mukuha said the rush by the directorate to issue the list while several matters are pending in court raised more questions than answers.

"The task force did not even capture most of our recommendations and now we are seeing the coffee directorate rushing to put some things in place while some issues are yet to be sorted out," said Mr Mukuha.

He said most of the farmers are of the view that co-operatives, which represent farmers' interests, should be allowed to have direct contacts with the buyers of their produce.

"We do not want brokers. We want a situation where we will deal directly with traders all over the world. Short of that, there is nothing a farmer will gain," the official said.

But Meru County Coffee Millers, the milling and marketing subsidiary formed by the Meru County Government and 47 coffee co-operatives in the area and which has been handling the produce of 33 societies comprising over 70 per cent of Meru coffee said it was satisfied that their commercial miller licence had been extended by the directorate.

The co-operative society mills its coffee at the former KPCU mills in Meru town, which it has leased.

Peasant Coffee Farmers association chairman Kambo Kambo said the existence of private millers and marketers in the list of dealers was an indication that efforts to streamline the sector will remain a pipe dream.