AFA locks out firm from coffee auction over farmers debt

The Agriculture and Food Authority (AFA) has suspended the licence of Eagle Crown Coffee Limited, locking it from trading at the Nairobi Coffee Exchange after it defaulted on Sh163 million payments to farmers.

The crops regulator said it was acting on a complaint letter sent by Kenya Planters Coffee Union (KPCU) to the buyer after it failed to pay farmers for 3,780 bags of produce bought on March 16.

According to Coffee Regulations, buyers are obligated to remit the sale proceeds to the direct settlement system either electronically or by banker’s cheque within five working days from the day of the sale of the commodity.

“In view of the above provisions in the regulations, Agriculture and Food Authority in consultation with the Exchange hereby suspends your buyers licence… until you comply with the regulations,” read a letter by acting AFA director-general Kellow Harsama to the firm.

The Exchange trading rules state that a dealer who has not settled payment in full by the prompt date shall be considered a defaulter and interest on outstanding amount will accrue with effect from the day when the amount was due at the prevailing lending rate in dollars.

Eagle Crown Coffee is a limited liability company wholly owned by the founder with 60 per cent shares taken up leaving 40 per cent available. As at December 31, 2017, Jackson N Kanampiu—the founder—held 600 shares of nominal value of Sh600,000.

The company’s main customers are in the US, but it recently started making inroads in the Middle East.

The suspension comes at a time when the agriculture sector is undergoing transformation with the government paying close attention to the duration that it takes for farmers to be paid.