Giant Kenya Planters Co-operative Union (KPCU), which has over 700,000 members, was locked out of trading at the Nairobi Coffee Exchange (NCE) after it failed to provide a Sh1 billion bank guarantee, the Attorney-General has said.
The AG made the revelation as part of his grounds of opposition to a suit KPCU has filed seeking to be licensed to trade at the NCE.
The State Law Office says the union has not complied with Coffee Regulations 2012 that requires it to provide a Sh1 billion bank guarantee in order to be allowed to trade at the exchange.
“That pursuant to the Coffee Regulations 2012 for the applicant (KPCU) to be issued with a Marketing Agent’s Licence, it must submit a Bank Guarantee worth Sh1 billion, a thing it has not done,” says the AG in a ground of opposition filed on June 13.
KPCU moved to court in April arguing that the NCE had locked it out despite the Agriculture and Food Authority having issued it with a licence to trade.
Respondents
The NCE, AG and Agricultural and Food Authority are listed as respondents
KPCU argues that the High Court had in a previous ruling declared a Coffee (general) Regulations 2016 unlawful but allowed the same to be in place to ensure stability of the coffee market as the laws were subjected to stakeholder discussion for review.
KPCU argues that the High Court had in a previous ruling declared a Coffee (general) Regulations 2016 unlawful but allowed the same to be in place to ensure stability of the coffee market as the laws were subjected to stakeholder discussion for review.
The union further said that on October 10, 2017 after it sought clarification, by consent the respondents were directed to consider application for licences under Coffee (general) Regulations 2016.
Subsequently, the union says, the authority granted it the licence and armed with this new permit, the union approached NCE on December 6, 2017 to be allowed to access the NCE but the request was declined on grounds that that authority had not informed the market and the AG of the decision.
The union argues that the response merely amounted to NCE playing for time to deny it access despite obtaining the licence legally.
KPCU says the decision is affecting its 700,000 members, who have delivered 23 tonnes of coffee to be auctioned at the NCE.
Largest single entity
The union, which is the largest single entity representing coffee farmers, says it had also made financial commitments to farmers on the strength of the licence it obtained.
The AG has, however, disputed the validity of the licence, arguing that no marketers’ licence can be issued on the basis of Coffee (general) Regulations 2016 since it is not yet in force.
The State Law Office argues that following the court order directing the review, the Coffee (general) Regulations 2016 have been subjected to stakeholder engagement, which has just been concluded.
The AG reckons that allowing KPCU to participate in the Nairobi Coffee Exchange before it provides the one billion bank guarantees exposes farmers to loss as there is no cushion to secure them from non-payment of dues by KPCU.
NCE is regulated by Agricultural and Food Authority for the sale of coffee both locally and internationally.