Coffee farmers caught between Munya and a hard place
Coffee agents and marketers have started a fight to kill coffee reforms consequently pitting government entities against each other.
The Ministry of Agriculture has launched a scathing attack on the Capital Markets Authority (CMA) in a fight to control coffee rules in what is seen as pressure from coffee cartels.
The new rules are now uncertain with the CMA pushing their application down three months attributed to a lack of readiness by marketers.
On the other hand, Agriculture Cabinet Secretary Peter Munya extended old laws by a year and introduced the 2021 coffee Bill to bring back the coffee sector under his domain.
He is also set to introduce Crops Crops (Coffee) (General) Regulations 2021 to kick CMA out of coffee matters.
The CMA rules that were supposed to come into force in July would leave only five brokers in charge of selling coffee in the Nairobi Coffee Exchange after they were licensed by the CMA.
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Meru County Coffee Marketing Agency Limited was granted a full coffee broker licence whereas other Kipkelion Brokerage Company Limited, Murang’a County Coffee Dealers Company, Mt Elgon Coffee Marketing Agency Limited and United Eastern Kenya Coffee Marketing Company Limited have been granted conditional licences.
This move would end the culture where some coffee cartels used their own brokers to push down farm gate prices, and their own marketing agents to sell to their own companies oversees thereby denying the farmers a higher return.
The new laws would have also allowed farmers to earn money directly and immediately once the coffee was sold under the Direct settlement system.
Coffee farmers would only need to instruct the bank on what deductions should be made on their money, millers and brokers would then send their invoices to the bank and the bank would settle everyone’s bills instantly.
But in the new 2021 Coffee Bill introduced by the CS, the system has been diluted where buyers will have seven days to remit money and factories and societies can still get the farmers cash so long as they obtain a resolution to deduct money for capital development and a nod from the ministry.
They are also entitled to five percent of the value of coffee sold net of the milling, warehousing and marketing costs for operations and maintenance.
Factories and societies and not farmers will be the ones supplying the system with payment details and the Minister would develop regulations for managing and operating the direct payments system.
