Kenyan Coffee Auctions

Kenya’s Coffee Auction System: A Legacy of Transparency Amid Reform

Kenya’s coffee auction system, established in 1934, remains one of the most transparent distribution mechanisms for fine green coffees globally. Held weekly at the Nairobi Coffee Exchange (NCE), the system has long served as a model for other specialty coffee auctions, including the renowned Cup of Excellence.

Historical Roots and Varietal Development

Coffee cultivation in Kenya began around 1900, introduced by British colonists. In the 1950s, Kenya’s Scott Agricultural Laboratories developed highly successful hybrids, SL28 and SL34, which largely replaced the original French Bourbon stock brought from Ethiopia. These Bourbon-derived varieties are celebrated for their full body, bright acidity, and signature blackcurrant notes, hallmarks of Kenyan coffee.

Post-Independence Structure and Auction Dynamics

Following independence in 1963, Kenya formalized its coffee trade through a government-run open auction system. This weekly auction established a pricing hierarchy based on quality, with higher prices awarded to superior lots. The most sought-after beans are typically AA grade, which refers to bean size (screen 17/18) rather than quality or defect tolerance. AB grade beans are slightly smaller (screen 15/16), with a 10% tolerance for beans below screen 15.

Before each auction, samples of each lot are distributed to the approximately 50 licensed exporters (or “members”) of the NCE. These samples are cupped both locally and internationally. For example, Mercanta receives samples for evaluation in its lab and instructs its exporter on preferred lots. Exporters then bid via agents at the auction to secure the desired coffees.

Liberalization and Direct Sales

Since 2006, Kenya has gradually liberalised its coffee marketing system. Farmers argued that the auction system enabled a long chain of intermediaries that reduced their earnings. In response, the government began licensing independent marketing agents to sell coffee directly to international buyers, bypassing the auction. These agents must meet strict criteria, including storage standards, safety protocols, and financial guarantees to ensure prompt farmer payments.

As of 2025, the number of Capital Markets Authority (CMA)-licensed coffee brokers has grown to 14, including county-based cooperatives and private firms. This expansion aims to enhance transparency, price discovery, and farmer empowerment.

Recent Reforms and Sector Challenges

In 2023, the Kenyan government, under President William Ruto, launched sweeping reforms led by Deputy President Rigathi Gachagua. These included:

  • Reopening the NCE to allow farmers to sell directly, cutting out brokers. 
  • Introducing a Direct Settlement System (DSS) to ensure faster, more transparent payments.
  • Proposing the Coffee Bill 2023, which seeks to:
    • Re-establish the Coffee Board of Kenya as the main regulator.
    • Transfer research responsibilities from the Kenya Agricultural and Livestock Research Organisation to a dedicated Coffee Research Institute.

However, these reforms have not been without disruption. Delays in issuing marketing and milling licenses have caused confusion and even led to the exit of major players, such as NKG Coffee Mills Kenya, a subsidiary of Germany’s Neumann Kaffee Gruppe.

Traceability and Market Evolution

While the auction system remains robust, traceability continues to be a challenge. Buyers may not always obtain detailed information about the exact origin of a lot. However, this is improving as both the auction and direct trade systems evolve to meet the demands of specialty coffee roasters and their customers.

Estates like Gethumbwini, which are well-known to exporters and buyers, offer more consistent traceability. But for many smallholders, especially those not yet integrated into direct trade channels, full transparency remains a work in progress.

More articles