Commodities

Regulations row brews uncertainty at coffee auction

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Agriculture Cabinet Secretary Peter Munya. FILE PHOTO | NMG

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Summary

  • Trading on the Nairobi Coffee Exchange (NCE) has been hit by uncertainty as a July deadline set for dealers to get new licences draws close amid confusion on when the permits would be issued.
  • The Capital Markets Authority (CMA) in March set a July 1 deadline for coffee brokers to get new licences under rules introduced last year to weed out cartels.

Trading on the Nairobi Coffee Exchange (NCE) has been hit by uncertainty as a July deadline set for dealers to get new licences draws close amid confusion on when the permits would be issued.

The Capital Markets Authority (CMA) in March set a July 1 deadline for coffee brokers to get new licences under rules introduced last year to weed out cartels.

The Agriculture ministry, however dismissed the CMA deadline arguing that the new rules would only be implemented once all stakeholders are ready.

Traders and managers of the NCE now face uncertainty amid the wrangling between the CMA and the ministry.

“We shall work with the decision that would have been made, the most important thing is that that move should not have a negative impact on trading,” the NCE said in a communication to traders.

Last year, coffee auction was interrupted for lack of clarity as the new regulations failed to take effect in April.

While the CMA sought to implement the Capital Markets (Coffee Exchange) Regulations 2020, Agriculture Cabinet Secretary Peter Munya argued that it was his ministry’s mandate because the Crops Act had not been amended.

The ministry subsequently threatened to have the regulations repealed on the grounds that the CMA did not involve all stakeholders when formulating the new regulations.

“If you look at the law, that transfer was not done properly because the Crops Act was never amended. The Crops Act gives the CS mandate to continue running the coffee value chain. CMA amendments originated from the Ministry of Trade but I was not party to that,” said Mr Munya.

He added the ministry will create an overall commodity regulator once the Agriculture and Food Authority (AFA) is restructured.

“In the Crops Act AFA is the regulator, the law was amended without amending the Crops Act to remove AFA as a watchdog,” he said, arguing that CMA is not properly structured to regulate agricultural commodities, which is different from securities.