Coffee trader hits back with demand for cash arrears

An association that was charged with running the Nairobi Coffee Exchange (NCE) until June this year is demanding payment for services rendered before termination of its contract, marking a new turn in the battle for control of the multi-billion shilling market.

The Kenya Coffee Producers and Traders Association (KCPTA) says it will go to court to enforce payments for services rendered up to June 1, when the government kicked it out of the NCE.

The association estimates that millers, marketing agents, dealers and warehouse operators owe it between Sh14 million and Sh17 million.

“We have served demand letters and players who fail to pay up for the services rendered before the forced takeover will meet us in court,” said KCPTA head of communications Sylvester K’Okoth.

KCPTA ran the Nairobi exchange up to June when the newly appointed Agriculture, Livestock and Fisheries secretary Felix Koskei suspended the weekly auction and appointed a Transitional Exchange Committee (TEC) to oversee the business.

The suspension of trade come hot on the heels of a report by the Coffee Board of Kenya (CBK), which raised the red flag over Sh50 billion that farmers supposedly lose to cartels who sell beans deposited as test samples.

To participate in at the NCE, a coffee dealer has to provide 14 kilogrammes of coffee beans as test samples.

The CBK report said coffee industry cartels have been colluding to rake in millions of shillings by selling the free samples in the same market.

The TEC team presided over their first weekly coffee auction on July 31, promising to boost transparency in their activities and compensate farmers for every sample deposited.

(Read: Reprieve for small coffee dealers as auction resumes)

Last week, the Coffee Board managing director Loise Njeru touched off a fresh storm when she instructed millers, marketing agents, dealers and warehouse operators to stop making payments to KCPTA’s accounts.

“KCPTA does not have the legal mandate to receive any funds which relate to the role of management of NCE,” Ms Njeru says in a letter dated August 15.

“The Coffee Board is hereby directing that effectively, all payments — whether outstanding or current — should be made to TEC accounts to enable it manage NCE smoothly.”

On Thursday, KCPTA officials accused the board of campaigning to cripple its operations by blocking payments for services it had already rendered.

The association wants payment to TEC to be limited to the period beginning July 19 when it officially took over the running of the weekly auctions.

“We read nothing but bad faith in the advice to persons and organisations not to pay what they owe us for services exclusively rendered by KCPTA before the forceful takeover,” said Mr K’Okoth.

The coffee auction will be opened to small dealers in new measures aimed at increasing output and streamlining the supply chain from the farm to the market.

Mr Koskei, during his first tour to the NCE on July 31, said the auction would be made more transparent ensure farmers get compensated for all test samples delivered.

The comments were meant to boost confidence at NCE at a time that coffee growing counties are campaigning to set their own auctions, hoping to attract better prices.