Nairobi, July 31 - Kenya has published long-delayed rules to govern the direct sales of coffee to buyers abroad, paving the way for farmers to by-pass a central auction where all Kenyan coffee has been traded since 1935.
Kenyan farmers have been demanding the introduction of the direct sales, also called the "second window", saying it would allow them to negotiate better deals directly with buyers abroad and remove a chain of middlemen who eat into their income.
But although the government had agreed in principle to allow the direct sales, the implementation was delayed by failure to publish rules and regulations to govern the new structure.
The Minister of Agriculture Kipruto Kirwa finally published the rules last week which would also oversee the exports of specialty coffee, officials said.
According to the rules, farmers will however sell their coffee through locally registered marketing agents.
Marketing agents are to be licensed once they demonstrate ability to access overseas market, conduct market research and must provide a bank guarantee to protect farmers' money.
The growers would instruct the marketing agent whether they prefer to export their coffee through the second window or the weekly auction which is not being terminated.
"The marketing agent shall reveal the price and agree with the grower for coffee sold through direct sales," the rules, published in a supplementary Kenya Gazette obtained by Reuters on Monday, said.
The rules define the direct sales as: "a contractual agreement between the grower and the marketing agent and a buyer located outside Kenya for the sale of clean coffee."
Until now Kenyan law stipulated that all Kenyan coffee must be sold at a central coffee auction held weekly.
Supporters of the auction say it promotes competition and is a good way of discovering prices. But its opponents have long accused traders at the auction of colluding over prices.
The government had feared that the second window could lead to peasant farmers falling prey to conmen while existing farmer institutions could collapse as farmers choose to sell coffee abroad to avoid paying past debts.
DEBT WORRIES
The leading Kenya Planters Cooperative Union (KPCU) had repeatedly objected to the second window worried farmers would abandon it and fail to pay million of dollars in debt.
The new rules require that all debts must be recovered.
"A marketing agent who fails to deduct and remit loan recoveries...shall pay the interest accruing from the loan during the period when that loan remains outstanding owing to delay," the rules said.
The new rules also require farmers intending to grow specialty coffee under an agreement with specific overseas buyers to register the transaction with the Coffee Board of Kenya.
"A buyer of specialty coffee and the grower or marketing agent shall each provide the board with the details of specialty coffee intended for export," the rules said.
Kenya's specialty coffees are rich mild Arabica beans grown above 1,200 meters above sea level.