Capital Market Authority is set to regulate coffee auction following the enactment of the Crops (coffee) General Regulations (2019) on July 1.
The Nairobi Coffee Exchange (NCE) is the coffee central auction in Kenya trading over 90% of Kenyan produced coffee.
Industry players in the coffee value chain will fall under CMA which will licence the NCE and brokers working on behalf of farmers. Furthermore, industry players such as county governments, cooperatives, and traders will be required to digitize their operations within the next year.
Coffee Sub Sector Implementation Committee chairman, Prof. Joseph Kieyah earlier this year praised the new regulations saying that they will bring transparency in coffee trading as the industry is marred with price manipulations by unscrupulous stakeholders. In addition, the regulation target global traders who are accused of marking down coffee prices at the NCE to obtain unfair profit margins at the international level.
The move aims at reviving the coffee industry as farmers will benefit from prompt payments. The crops regulation will require payment to be made within 5 days of purchase. Failure to comply with the payment guidelines will see roasters and buyers suspended from trading.
The Crops (coffee) general regulations (2019) states, “every industry player shall digitize their operations for efficient service delivery and the system must have access by multiple parties, protection against unauthorised entry, and destruction and tampering of data.”
Digitization ensures easy access to the system by other players. Digitized systems are required to have a back-up to ensure business continuity in case the computer system is destroyed and should be prone to hacking, a threat brought by automation.
Moreover, the new regulations will reconstitute the NCE’s board of directors to include principal secretaries from ministries of agriculture, finance and cooperatives in addition to the farmers, processors, and traders who comprised the previous board. Inclusion of a diverse board will curb unfair price determination while promoting the equitable share of decision making at the exchange’s helm.