Liberalisation of the Coffee Sector - Kenya Coffee Producers Association (KCPA)

Since 2012, KCPA has been lobbying for changes in the coffee sector. These changes include, coffee taxation, coffee rules and the representation of coffee farmers in decision making bodies. In 2013, KCPA undertook a study of the coffee value chain to guide its advocacy efforts.

KCPA succeed in improving representation of farmers with the inclusion of five grower representatives to the National Coffee Exchange Management Committee.  Additionally, the National Coffee Exchange (NCE) reduced the quantity of coffee samples provided for auction from 14 to 9 kilograms. This resulted in coffee farmers retaining coffee beans worth KShs. 41 million in 2014 and further received KShs. 20 million for their samples. 

In 2016, a Coffee Taskforce, which included KCPA representatives, was set up by the Office of the President to provide recommendations to improve the sector. This process led to the removal of 4% levy (previously used to finance the Coffee Research Institute, Coffee Directorate and Roads Board) on coffee sales in the 2016 Finance Act.

The issue

The Coffee Taskforce developed Coffee (General) Regulations, 2016 (L.N. No. 120 of 2016) that were gazetted in June, 2016. However, the High Court suspended the Coffee Regulations 2016 following a petition by the New National Farmers’ Association and the Council of Governors (CoG) citing lack of public participation in the development of the Regulations.

In addition, there was a growing concern by producers that the regulations remained prohibitive due to the involvement of the state along the value chain.

KCPA’s Position

KCPA’s position was that these regulations create distortion in the market and dis-incentivises coffee production. Through its advocacy KCPA had consistently pointed to the need to fully liberalise the sector.  

Using the horticultural sector in Kenya as an example KCPA argued that a less regulated sector which relies on international market standards had encouraged the growth of the horticultural sector making it the highest foreign exchange earner in the crops sub-sector.

KCPA argues that with full liberalisation of the sector Farmers will have full control of their produce thus:

  • Reduce the exploitation by unscrupulous dealers along the value chain
  • Farmers will be in a better position to negotiate the best price for their crop
  • Farmers will have access to various buyers and the opportunity to engage in contract farming
  • Buyers will have opportunity to source coffee directly from producers thus reducing costs to the farmer
  • Producers will be incentivised to undertake value addition on their commodity to exploit opportunities offered by regional and international markets ultimately attracting higher prices for premium crop;
  • A liberalised coffee sector will open up job opportunities especially for women and youth and other interested investors in the coffee sector.