Reduced direct sales lower Coffee farmers’ earnings to Ksh 40 per kilo


Coffee farmers are back at earning peanuts for the first time in 5 years. The majority of coffee cooperatives in Kenya paid farmers less than Ksh. 40 per kilo while Mbuni was paid at Ksh. 150 per kilo.

Cooperatives management lament the introduced reforms by the government that blocked major coffee buyers.

Kenyan coffee is sold in two methods; Direct sale or through the Nairobi coffee auction.

Coffee cooperatives can sell their coffee to the highest bidder at auction through a licensed marketer.

Alternatively, they can also sell directly to a licensed buyer at the agreed prices.

Direct sale is the preferred selling method by most cooperatives as prices are often higher than that of auctions.

According to Crops(coffee)(General)(Amendment)Regulations, 2022; A buyer, roaster, miller-marketer, grower marketer licensed by the relevant licensing authority, may trade at the auction in accordance with these Regulations and any other laws that may govern the auction.    

Cooperatives management has complained about the increased cost of operations caused by the new taxes.

The low earnings come after farmers lamented delayed payments dating back to December 2023 on coffee sold at the auction.

They hope direct buyers will be licenced back and enjoy better prices.

coffee farmers earn peanuts
A bearing coffee branch

DIRECT SALES GUIDELINES

According to Crops(coffee)(General)(Amendment)Regulations, 2022

A. Direct Sales Guidelines

Amend the sixth schedule by deleting the guidelines of Direct Sales and insert the following new direct sales guidelines

A grower marketer or grower miller who has secured an overseas Buyer contract for the coffee, shall –

1. Store coffee for direct sales at designated warehouses.

2. Shall enter into a direct sales contract in the format prescribed under these guidelines and shall lodge the contract with the Authority for registration and approval.

3. Submit to the Authority a sample of 250gm of the said coffee for quality analysis and for arbitration purposes.

4. Have the coffee inspected by the Authority, in order to ascertain the quality, quantity and the value and for approval of the contract.

5. Be issued with an inspection certificate for every coffee consignment declared to the Authority for direct sales to ascertain the coffee quality. The inspection certificate shall be one of the requirements for clearance of direct sales exports.

6. The Authority liquorer shall conduct quality analysis and issue a certificate of conformity with coffee grading and quality standards.

7. Direct coffee sales shall be subject to price competition at the Nairobi Coffee Auctions whereby the Direct sales price shall serve as a reserve price.

8. Where coffee with a direct sales offer fetches a higher price at the Coffee auction than the direct sale price offered, the prospective direct sale buyer shall have the right of first refusal to buy the coffee at the auction price.

Read: “Siri ya kahawa sio kilo”-How Kenyan Kenyan Coffee is Priced

9. Provided that if the prospective direct sales buyer refuses to buy the coffee at the Coffee auction price, the coffee shall be sold to highest bidder above the reserve price at the auction

10. All Direct sales price offers shall be communicated to the auction organizer five days prior to an auction.

11. Growers and overseas buyers shall agree on the mode of payment for the coffee purchased which shall be part of the contract submitted to the Authority for approval.

12. Apply to the Authority for;

(a) ICO certificate;

(b) KEPHIS certification;

(c) Movement permit(s)

(d) Quality certificate; and

(e) Any other necessary clearance

13. Appoint an agent for purposes of logistics and other processing requirements related to coffee exports where applicable.

14. Remit monthly returns to the Authority on Direct sales undertaken.                                                                                                      

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