AFA excludes company from coffee auction due to farmers’ debt

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Market News

AFA excludes company from coffee auction due to farmers’ debt


kpcu
geraldandae

Summary

  • The crop regulator said it was acting on a complaint letter sent by Kenya Planters Coffee Union (KPCU) to the buyer after it failed to pay farmers for 3,780 bags of produce purchased on March 16.
  • In accordance with coffee regulations, buyers are required to submit the proceeds of the sale to the direct settlement system, either electronically or by bank check within five business days of the day the product is sold.

The Agriculture and Food Authority (AFA) has suspended the license of Eagle Crown Coffee Limited, preventing it from trading on the Nairobi Coffee Exchange after it defaulted on its payments of 163 million shillings to farmers.

The crop regulator said it was acting on a complaint letter sent by Kenya Planters Coffee Union (KPCU) to the buyer after it failed to pay farmers for 3,780 bags of produce purchased on March 16.

In accordance with coffee regulations, buyers are required to submit the proceeds of the sale to the direct settlement system, either electronically or by bank check within five business days of the day the product is sold.

“In view of the above provisions of the regulations, the Agriculture and Food Authority, in consultation with the Stock Exchange, hereby suspends your buyer’s license…until you comply with regulation,” read a letter from the AFA’s acting chief executive, Kellow Harsama, to the company.

The Exchange’s trading rules state that a broker who has not settled payment in full on the immediate date will be considered a defaulter and interest on the unpaid amount will accrue from the day the amount was due at the rate of loan in force in dollars.

Eagle Crown Coffee is a 100% founder-owned limited liability company with 60% of the shares taken, leaving 40% available. As of December 31, 2017, Jackson N Kanampiu, the founder, held 600 shares with a par value of Sh600,000.

The company’s main customers are in the United States, but it has recently started making inroads in the Middle East.

The suspension comes at a time when the agricultural sector is undergoing a transformation, with the government paying particular attention to the length of time it takes for farmers to be paid.

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