From Origin

New Rules Block Coffee Dealers From Holding Multiple Licenses

Some coffee dealers are likely to lose their licences following a new rule set that limit the number of permits that a trader in the retail business can hold.

In the proposed (General) Regulations, 2018 Coffee Sector Implementation Reforms (CSIR) has developed, a coffee trader cannot be issued with a commercial miller’s license or the one for the warehouseman.

Any license found to contravene this rule, according to the regulations, will be revoked.

This will deal a major blow to some dealers who have acquired various licences using different names.

In January, the issue of sibling companies being involved in the coffee business came up at the weekly auction when some farmers complained, citing conflict of interest.

They pointed a finger at the Agriculture and Food Authority, which is the industry’s regulator wondering why it had issued different licenses to the sister companies.

Investigations by Sunday Nation established that this was the trend at the auction.

For instance NKG Mills, a miller owned by Neumann Kaffee Gruppe, is the same company which owns Tropical Farm Management and Ibero Kenya Limited. The former is a marketing agent while the latter is a coffee exporter or a dealer.

The three companies are among others that have been involved in the coffee business at the sale.

Similarly, Sustainable Management Services (SMS) – one of the coffee marketer licensed to do business at the auction is owned by ECOM Agroindustrial Corp Ltd. The global company has merged with Coffee Management Services (CMC), which owns Central Kenya Coffee Mills and CMC Mills of Eldoret.

Sangana Commodities (K) Limited, which is a dealer is also an export company of ECOM.

All these companies have legally been doing business at the auction but the question remains: does the licensing authority know that they are one?

When contacted, the head of Coffee Directorate, Mr Greenville Kiplimo, promised to investigate before responding.

The directorate is the board of the authority that deals with matters related to licensing of coffee milling, marketing and export.

Mr Kiplimo did not respond to the question sent to him through email. Issues that farmers were raising is that when grading green coffee beans, millers are supposed to give the commodity a reserve price before negotiating with the dealer, which was previously the work of a marketing agent.

So, chances of the three players setting up their own prices is possible.

Despite rejecting the draft CSIR developed over some sections regarding mode of paying growers their money, many farmers have supported this idea of revoking licences of sister companies.

“A licensing authority may after inspection and evaluation of an application received under these regulations, grant the licence applied or reject the application,” say the rules.

All licences are expiring at the end of next month meaning that players involved in the coffee business are required to apply for others afresh.

In the rules, which are being subjected to public participation, agents have no role in the marketing of coffee as their work will be done by millers.

Most millers double as marketing agents and chairman of CSIR, Prof Joseph Kieyah did not want to dwell much on this issue and only said:

“Marketers don’t do much, they just do the cataloguing.”

In the draft document, which has been revised from a previous one growers rejected last year, counties will be sharing responsibilities of issuance of certificates and licences with the authority.

Certificates such as licensing cooperatives, groups or individual growers to operate a pulping station will be the work of counties not the authority.

Even authorising growers to mill, market and roast their own beans is the responsibility of the devolved units.

 

 

By MUCHEMI WACHIRA

 

 

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