Coffee Buying Process
In Kenya, coffee is traded under a strictly regulated system overseen by the Agriculture and Food Authority (AFA). For a foreign company to acquire coffee, there are two primary legal pathways: the Central Auction System and Direct Sales (often called the “Second Window”).
OPTION 1. The Central Auction System (Nairobi Coffee Exchange)
This is the most common method, accounting for roughly 80–90% of Kenya’s coffee trade. It is a transparent, competitive bidding process held every Tuesday.
The Workflow
- Licensing: AuriCare International is already registered, licensed and bonded as a Coffee Dealer (Buyer).
- Sampling: Five days before the auction, marketing agents provide 250g samples of the available lots to AuriCare International for cupping and quality analysis.
- The Auction: AuriCare International will by proxy bid for coffee for foreign clients at the Nairobi Coffee Exchange (NCE). Historically a physical floor, this is increasingly moving to an online platform to allow international participation.
- Invoicing & Payment: AuriCare International will handle invoicing and payment on behalf of foreign clients, either through buy and deliver FOB or foreign clients can open a letter of credit or deposit funds within five days. Payment must be made in US Dollars to the Coffee Exchange Settlement Account within 7 days.
- Ownership Transfer: Upon complete payment, AuriCare International receives a Warehouse Warrant, which is the legal document of ownership used to claim the coffee from the designated warehouse.
2. Direct Sales (The "Second Window")
Introduced in 2006, this method allows foreign buyers to bypass the auction and negotiate directly with growers or cooperatives. It is preferred by specialty roasters seeking traceability and long-term partnerships.
The Workflow
- Partnership: AuriCare International will on behalf of foreign clients identify a specific Grower or a Cooperative Society that holds a Grower-Marketer License.
- Contract Negotiation: AuriCare International will negotiate the price and volume for coffee. The price must be at least equal to or higher than the average price for that grade at the Central Auction (to ensure farmers aren’t exploited).
- Registration of Contract: AuriCare International will draw up and register a legally binding “Sales Contract” to be registered with the Coffee Directorate (AFA) for oversight and approval.
- Logistics: AuriCare International will on behalf of foreign buyers engage an agent to handle the milling (if not already done), quality inspection by a certified liquorer, and packaging.
- Payment & Shipment: AuriCare International will facilitate payment directly to the grower’s account as per the contract. AuriCare International then handles the export documentation (ICO Certificates, Phytosanitary certificates).
