The five coffee traders issued with the licences by the Capital Markets Authority (CMA) will not take part in this week’s auction because they do not have the necessary infrastructure for doing so.
The CMA licensed the brokers last week to start trading directly at the Nairobi Coffee Exchange (NCE) without necessarily going through the marketers as has been the case previously.
Preparations for the next auction start on Thursdays with traders submitting their coffee samples to aid in making a catalogue to guide the auction.
“We’ve not received the samples from the five brokers and that means that they will not be participating in the next auction to be held on July 6,” Daniel Mbithi, chief executive NCE said.
Meru County Coffee Marketing Agency Limited was granted a full licence while Kipkelion Brokerage Company, Murang’a County Coffee Dealers Company, Mt Elgon Coffee Marketing Agency and United Eastern Kenya Coffee Marketing Company got conditional licences.
The brokers are required to trade within the terms of the new regulations, which compel them to use the Direct Settlement System in paying farmers dues.
The system is not in place at the moment as there is no structure to support it, with only a handful of traders already licensed by CMA.
The new regulations were expected to take effect on July 1, but with only five traders ready for licensing, the CMA extended the deadline by another three months.
However, confusion ensued a day after the CMA announcement when Agriculture Cabinet Secretary Peter Munya, who has been opposed to CMA’s oversight role in coffee trading, said he had extended the old regulations by five months.
The battle for the control of coffee trading between CMA and Agriculture ministry has simmered since the gazettement in April 2020 of the Capital Markets (Coffee Exchange) Regulations that gave the authority the mandate to license the coffee exchange and brokers.
Meanwhile, coffee prices at the weekly auction last week jumped 27 per cent in the first sale after the resumption of trading from a two-month recess, returning the best price realised this year.
A market report from NCE shows that the commodity sold at Sh27,000 for a 50 kilogramme bag, up from Sh21,276 in the last sale before the recess.
The NCE is projecting good prices in upcoming auctions due to high quality coffee coming in from farmers in Eastern and parts of western Kenya, coupled with good prices in the world market .