Here’s a report from a visit to an auction at the Nairobi Coffee Exchange in 2004. This was done on behalf of an investor who wanted to export coffee to North America and was around the time there was a controversy on the licensing of coffee marketing agents like Tetu Coffee.
- Kenya has a real coffee exchange, where coffee is bid for and sold electronically in US$ but the exchange is located off Haile Selassie Avenue, near the main bus station.
- Dealers are issued with electronic keys that enable them to buy coffee that is in the warehouses of KPCU and other coffee marketers. The coffee lots, priced in dollars, are displayed on a digital boards for local buyers such as Dormans and Java, and exporters.
- These dealers pay $1,000 for a license to trade at the exchange. I talked to one dealer, and he advised to buy from him because he exports up to 15,000 bags to the States each year. They have offices in LA and NY and one can pick up a bag from either of these places for around $300.
- 38 bags (2,303 kg) of AA (60Kg) sold today for $118 while he bought 49 bags (2956 kg) of C grade coffee for $77. Also, coffee grades are difficult to prove because one tree can produce all seven varieties of coffee.
- It costs 8 Euros to airfreight a kilo to North America (about 800 shillings per kilo – and therefore about 40,000 per 50kg bag)
I learnt about coffee grades and the industry – there are so many cartels, millers, marketers, dealers etc. – that the Tetu concept to cut out all these middlemen, and deal with the farmers makes sense, but this would also affect the livelihoods of everyone in the chain.
It would be nice to visit the Nairobi Coffee Exchange again in 2021.
EDIT June 2021 (exceprts):
- The Capital Markets Authority (CMA) has issued licenses to five coffee brokers that will allow the brokers to carry out the role of coffee brokerage services at the Nairobi Coffee Exchange (NCE) with effect from 1 July 2021.
- Meru County Coffee Marketing Agency has been granted a full coffee broker licence while Kipkelion Brokerage Company, Murang’a County Coffee Dealers Company, Mt. Elgon Coffee Marketing Agency and United Eastern Kenya Coffee Marketing Company have been granted conditional licences, to come into full compliance with the requirements, within the next three months.
- To ensure that there is no disruption in the coffee value chain, the Authority has granted an extension of 3 months (from 30 June 2021) to the Marketing Agents currently trading for them to apply for the coffee broker licences.