Coffee brokers in court to challenge auction fees

Coffee brokers have moved to court to block the implementation of new Capital Market (coffee) Regulations 2024, which will reduce their auction fee by one per cent.

Alliance Berries Limited, United Eastern Kenya, Coffee Marketing Company Limited, Coffee Estate Bourgeoisie, Brokers Agency Limited, and Minnesota Coffee Marketers claimed the new regulations were passed without public participation.

The court heard that brokers initially received a two per cent agency fee from the gross sales, and in dollars.

However, the 2024 regulations lowered the brokerage fee to one percent. The coffee exchange fee and direct settlement system provider fee were set at 0.3 per cent.

In addition, the Capital Markets Authority (CMA) statutory fee was set at 0.2 per cent.

The brokers claimed that the regulations would come into effect on February 18, 2025.

According to the case filed by Teddy and Company Advocates, the government did not consider that existing contracts with coffee farmers exist.

Coffee brokers sued the National Treasury Cabinet Secretary, the Attorney General, the CMA and the Nairobi Coffee Exchange. Their representative, Peter Githinji, claimed they were not involved in developing the new regulations.

According to him, the new regulations illegally introduced coffee exchange and CMA fees without the approval by Parliament.

“Without any public participation or engagement of the stakeholders, the first respondent (CS) published the Capital Markets (Coffee Exchange (fee) regulations 2024,” claimed Githinji.

He asserted that the move would hamper coffee trade in the country.

According to him, coffee brokers are bound to lose their contracts, or farmers will move to court to recoup the extra amount provided under the new law.