Coffee exchange operator opposes State takeover

The Agriculture ministry has asked KCPTA to channel its complaints through the Coffee Board of Kenya (CBK), which regulates the industry.

Before 1998, the coffee auction was run by Kenya Coffee Auctions, a subsidiary of the CBK, which had the majority 51 per cent stake while Valentine, a company that ran the NCE held the rest.

An attempt by the government to take over the management of the Nairobi Coffee Exchange (NCE) has run into headwind after its present operator vowed to challenge the move in court.

The Kenya Coffee Planters and Traders Association (KCPTA), which runs the auction, termed the takeover “unconstitutional” and demanded further consultations on the matter.

“We are moving to court on Tuesday (today) to challenge the action by the government. Basic constitutional requirements such as public participation on such critical matters were ignored,” Anthony Otiende, the association’s legal officer said.

Agriculture minister Sally Kosgei had last week gazetted new regulations that removed the management of the facility from the hands of the KCPTA in a bid to shake off cartels from the coffee auction.

Under the new arrangement, the NCE would be placed under the Coffee Act and the Nairobi Coffee Exchange Trading Rules and run by a management committee. KCPTA is registered under the Societies Act Cap 108.

Managers of the NCE would also be required to present mandatory monthly returns on all operations in a bid to boost transparency and accountability, Dr Kosgei said.

The minister’s action came in the wake of increasing complaints by farmers that cartels were denying growers full returns from the sale of their produce. Despite the complaints, however, the regulators could not act without a legal framework, prompting the government attempt to regain control of the auction.

Under the present arrangement, KCPTA is not answerable either to the Ministry of Agriculture or the Coffee Board of Kenya because its article of association is exempt from the provisions of the Coffee Act 2001 or the Coffee (General) Rules 2002 that govern other institutions in the coffee industry.

This means KCPTA only has links with the Registrar of Societies to who it files its annual returns. But even the registrar lacks the powers to intervene in its day-to-day activities.

KCPTA, however, said the government’s move to overhaul the management of coffee trading was too drastic and defied the spirit of public participation and consultation as required by the new Constitution.

“While we continued to push for dialogue, some government officers were discreetly pushing for the gazettement of laws and regulations that industry stakeholders had not discussed exhaustively,” Mr Otiende said.

Correspondence seen by the Business Daily, however, showed that other industry stakeholders such as the Commercial Coffee Millers and Marketing Agents Association (CCMMAA) and the Kenya Coffee Producers Association (KCPA) had actively participated in the process that resulted in the introduction of the new rules and regulations by the minister.

KCPTA chairman Pius Ngugi urged the government to review its action and consult further into challenges affecting the coffee industry.

“We need to have a holistic review of the industry so that we know where the actual problems is,” he said. KCPTA claimed the government ignored its views on the challenges affecting the auction and instead opted to work with a few stakeholders with selfish interests in the industry.

The Agriculture ministry has asked KCPTA to channel its complaints through the Coffee Board of Kenya (CBK), which regulates the industry.