•The Coffee Bill 2020 is now before Parliament after undergoing a consultative process in the counties spearheaded by the Cabinet Secretary, Ministry of Agriculture.
•If enacted, the new law will infuse radical changes in the coffee sub-sector.
A constitutional petition in the High Court by five cooperative societies seeking to halt the enforcement of the Crop (Coffee) General Regulations, 2019 was recently dismissed but not without exposing the intrigues surrounding ongoing reforms in the coffee industry.
The petitioners had challenged the constitutionality and statutory legality of the rules on, among other grounds, that the National Assembly did not facilitate public participation as required by law, and that the regulations were not tabled in the Senate for consideration arguing that the regulations concerned matters in the realm on counties since agriculture is a devolved function.
But in a judgement delivered February 11, 2021, the High Court not only found that there was sufficient engagement with the stakeholders in the coffee sector, but also that procedural lapses in transmitting the regulations to the Senate were not capable of invalidating the rules.
The petition mirrored an earlier case by the Council of Governors successfully challenging the Crop (Coffee) General Regulations 2016, which the court quashed, leading to the subsequent formulation of the 2019 Regulations.
The 2016 rules were based on the recommendations of the Presidential Taskforce on Coffee Sub-Sector Reforms but encountered the now familiar pattern of Trojan-horse litigation fronted by vested interests out to scupper reforms in the agriculture sector.
The Coffee Bill 2020 is now before Parliament after undergoing a consultative process in the counties spearheaded by the Cabinet Secretary, Ministry of Agriculture.
If enacted, the new law will infuse radical changes in the coffee sub-sector. Crucially, it seeks to emancipate the smallholder farmer from the yoke of cartels, right from the local factory level, all the way to the coffee auction.
Coffee factories will be permitted to register as autonomous societies under the Cooperative Societies Act if they so desire or if the members want them registered as such. This means that factories will no longer be forced to belong to larger cooperatives.
Although the requirement for amalgamation of factories into cooperative societies was meant to cut costs, this has not led to the desired outcome. Instead, the hugely misgoverned coffee societies ended up saddling the already over-burdened small-scale farmers with enormous debt without their consent.
The small scale coffee farmer depends almost entirely on the factory unit to process and market their coffee. The Bill practically empowers farmers to make important decisions affecting production, processing and marketing of their crop at the factory level. Under the Bill, farmers will have the final say on decisions at the factory level.
Coffee factories will be permitted to pick millers of their choice. And in order to prevent millers from manipulating milling losses to deny farmers their rightful share of the proceeds, the Bill proposes to cap milling losses at 18 percent. This should put more money into farmers’ pockets.
Payment for all coffee sold will be done through a Direct Settlement System (DSS) from which payments shall be made directly to all those who offered a service in coffee value chain. This includes individual farmers, millers and marketing agents, thus reducing delay and lack of transparency in payments. Sale of coffee will be through auction and direct sales at the Nairobi Coffee Exchange. Buyers will be required to remit payments to marketing agents within seven days of buying the coffee.
A strengthened Coffee Board of Kenya will, working with the counties, promote competition in the industry and regulate players in the value chain. The Board together with the Coffee Research Institute (CRI) will be expected to set the research agenda while undertaking capacity building, technology transfer and technical support to counties on coffee issues.
The Board will also be tasked with issuing and renewing commercial coffee miller license, coffee buyers license, marketing agents license, independent cupping laboratory license and warehouseman’s license.
CRI will be an autonomous body and the lead agency in developing climate-resilient crop varieties that are also pest and disease resistant. Additionally, the research body will be the custodian of Kenya’s coffee genome.
Agriculture being a devolved function, counties are instrumental in steering coffee reforms. Of the 47 counties, 41 produce coffee. The Coffee Bill is aligned with the constitutional reality of devolution by equipping counties with the legal tools to effectively oversee coffee issues including licensing pulping and hulling activities as well as Warehouse operators.
The role of counties extends to offering incentives to farmers such as affordable inputs and providing extension services and infrastructure like roads in their localities. To properly execute their mandate, counties will be allowed to form County Coffee Committees to oversee several aspects of the coffee industry at the devolved level.
The Bill also proposes to re-introduce various coffee levies that were previously scrapped like the 2% levy on gross sales to be remitted to CRI to support research, and the 4% coffee import levy calculated on customs value of the coffee, to go to the Board to support coffee promotion.
There is also the 2% buyers levy, with 1% to be utilized in the Board’s regulatory functions and the other 1% being injected into coffee growing counties to support coffee development.
There is also a need to fully implement the findings of the presidential taskforce on coffee, which process appears to have slowed.
Mr. Choto is a lawyer and policy analyst. [email protected]