Nairobi, Nov 14 - Kenya has licensed 32 new marketing agents, paving the way for the start of direct exports of coffee under new reforms that allow farmers to bypass a long-established central auction, officials said on Tuesday.
Kenyan coffee farmers have long demanded an alternative to the coffee auction saying a "second window" would lead to higher incomes due to increased competition and less bureaucracy.
Farmers say the auction system encourages the existence of a long chain of middlemen who eat into their income. But supporters of the auction, which has been in existence for the last seven decades, say it promotes price discovery mechanism.
The government has said that both the so-called "second window" and the central auction system will run concurrently.
Experts said it would take at least up to 2008 for the smallholder farmers to begin negotiating to sell their coffee directly to established roasters abroad.
Most of those in the list of new marketing agents are small and middle-scale growers who lack reliable communications tools to keep in touch with the international market.
"These guys will take time to learn how to market," a commodity analyst said. "For them it will take another year to learn how to sell coffee outside the auction."
He said winning the licence was positive for the growers because they are going to be in charge of their coffee at the auction, deciding on when to deliver it and how much to sell it.
At the moment all Kenyan coffee at the auction is sold through three marketing agents who demand a fee.
"It is my expectation that with the licensing of more marketing agents, there will be increased competitiveness which will translate into better returns to the growers hence the recovery of the coffee industry," Agriculture Minister Kipruto arap Kirwa told reporters at a news conference.
SIGNS OF RECOVERY
After many years of poor performance, Kenya's coffee sector is showing signs of recovery due to better prices and industry reforms. But the industry still lags tea, tourism and horticulture as top export earners for the east African country.
A total of 65 firms had applied for the marketing agent licence but almost half had not yet fulfilled stringent licence requirements including storage standards, safety and a hefty bank guarantee to ensure farmers are paid.
Kirwa said he was ready to license the remaining applicants as long as they fulfil the required conditions.
"Those that have not fulfilled the requirements are encouraged to move with speed," he said. "They are not locked out. This is a process."
Kenya is a small producer of coffee globally but is known for its high quality.