The Nairobi Coffee Exchange (NCE) has called on coffee growers to present their products for sale since every coffee lot presented at the auction has its own buyer and will always attract a competitive price as there are about 121 licensed buyers.
NCE Management Committee Chairperson Peter Gikonyo explained that in 2020, they acquired a web-based platform to enable trade participants to work remotely from their offices or homes in any part of the world.
“The digital upgrade is one of the successes NCE celebrates today, as it has brought a lot of ease to the way coffee is traded. To enhance transparency and encourage growers to follow trading, regional screens were installed in various coffee-producing regions, including Nyeri, Kirinyaga, Kisii, Bungoma, Machakos, and Meru,” said Gikonyo.
Addressing the press on Wednesday, Gikonyo said that they have also adopted the Direct Settlement System (DSS), which is a banking facility provided by commercial banks and regulated by the Central Bank of Kenya, for clearing and settling coffee sales proceeds.
“Currently, the Cooperative Bank of Kenya is the appointed service provider, with the key users including coffee growers, buyers, brokers, warehousemen, and millers,” he said.
According to Gikonyo, the move will not only enhance the transparency, efficiency, and effectiveness of the trade but also improve the liquidity for growers as the coffee sales proceeds are settled directly into their US dollar accounts within the prompt date after the sale.
“So far, US$ 663,228 for sales 30 and 31 have been paid through the DSS successfully,” he said.
He added that currently the auction attracts an average of 25 buyers on each auction day, and this low participation by buyers affects competition in the bidding of coffee at the auction as this is where 80 per cent of the Kenyan coffee is traded.
“Currently, there are 121 licensed coffee buyers by the Agriculture and Food Authority (AFA) for the season 2023/2024 but only 58 have registered at the NCE to buy from the auction. This is a major concern,” said Gikonyo.
He explained that at the end of the coffee year 2021/22, they had 52 buyers participating in the auction against 122 coffee buyers licensed by the AFA Coffee Directorate for the same period.
Gikonyo said that the Exchange encourages all the licensed buyers to participate in the auction, as that is the reason they were licensed and that they are in the process of putting mechanisms in place to ensure their participation.
“In the crop year 2021/22, auction sales stood at 630,646 full bags, with the highest buyer (Ibero Kenya Ltd.) purchasing about 24 per cent. Other major buyers who featured included Kenyacof Ltd., Taylor Winch Ltd., C. Dorman Ltd., Mumbi Coffee Merchants Ltd., and Star Coffee Ltd., amongst other coffee traders,” said Gikonyo.
He added that in the crop year 2021/22, auction sales stood at US$ 227,332,870.42 in 630,646 full bags of coffee traded at the auction in the same year. The value generated for the year went up by US$ 86.1 million from US$ 141,240,377.46 in the previous year, 2020/2021, representing 60.95 per cent.
“Volumes traded also went up by 54.79 per cent to 407,432 full bags in the previous year. This records the highest volumes the Exchange has traded over the last 10 years, which has in turn translated into better payment to the farmers,” said Gikonyo.
He highlighted that among the top destinations, whose total uptake is about 79.6%, only Tunisia and Norway do not belong to any major economic bloc.
“Countries such as Belgium, Germany, Sweden, and Denmark belong to the EU, which takes about 41.2 per cent. It is not surprising that none of the countries comprising South America’s common market are presently importing coffee from Kenya; the economic bloc includes, among others, Brazil and Colombia, which are major world coffee producers,” explained Gikonyo.
By Joseph Ng’ang’a
