Nearly half of the coffee buyers at the auction will lose their licenses for not being active in the weekly trading despite having the necessary permits.
Nairobi Coffee Exchange Chair Peter Gikonyo says the coffee auction only attracts an average of 25 buyers weekly, despite hundreds of traders being licensed, significantly impacting on the price of the beverage at the auction due to limited competition for available beans.
Mr Gikonyo said there are at least 64 coffee buying companies that have been licensed to trade and are not participating in the auction.
“The low buyer participation has affected coffee prices in the country due to low bidding competition and we plan to revoke the licenses of those who are not taking part in the sales,” said Mr Gikonyo.
The government has been keen on instituting reforms in the coffee sub-sector, with a proposed review of coffee value chain players licensing being at the center of the reforms.
Reviewing the coffee licensing regime, the government says, will reduce in trading in coffee sales by eliminating multiple licensing.
The coffee directorate suspended all the traders licenses in June and required them the reapply afresh to take part in the auction, a move that significantly affected the trading activities as there was no action for close to a month.
The chair said the 64 license holders have not participated in the auction for extended periods period of time. The coffee directorate, under the Agriculture and Food Authority, has licensed a total of 122 buyers at the auction.
The exchange said coffee farmers have been paid KSh97.7 million through the direct settlement system (DSS), a month after it was operationalised.
DSS ensures that farmers payment is paid directly unlike previously where buyers would hold the money for some time before wiring it to producers.
This was part of the reforms brought about by the General Coffee Regulations that put the Capital Markets Authority in charge of the coffee exchange.