Kenya Drafts Regulations for Four Distinct Coffee Marketing Channels Under Coffee Act 2026

Operationalizing the Coffee Act 2026 Framework

The Coffee Board of Kenya (CBK) has initiated the formulation of subsidiary regulations necessary to operationalize the Coffee Act 2026. The parent statute, which was formally signed into law by President William Ruto in March 2026, establishes a comprehensive legislative restructuring of the country's coffee value chain.

Confirmation of the regulatory drafting process was delivered by CBK Chairman Henry Kinyua during engagements with industry stakeholders. The forthcoming subsidiary instruments are intended to provide the administrative and compliance guidelines required to implement the statutory mandates outlined in the Act. This includes defining operational procedures for market actors, formalizing oversight criteria, and guiding the commercial interface between local producers and domestic and foreign procurement entities.

Statutory Creation of Four Marketing Channels

A central component of the Coffee Act 2026 is the legal diversification of trading pathways available for Kenyan coffee. Historically and currently, approximately 80 percent of all Kenyan coffee is transacted through the centralized Nairobi Coffee Exchange auction floor.

Under the new statutory framework, the law formally establishes four distinct marketing avenues through which coffee can be commercialized:

• The Nairobi Coffee Exchange (NCE): Retention of the centralized domestic spot auction platform.
• Direct Sales: A legalized bilateral mechanism enabling direct purchase transactions between buyers and producers.
• International Commodity Exchanges: Authorization to list and trade Kenyan coffee on overseas exchange platforms.
• Cabinet Secretary-Prescribed Channels: Any other marketing avenues officially determined and prescribed by the Cabinet Secretary responsible for agriculture.

By delineating these four specific channels, the framework moves the sector away from statutory reliance on a single centralized auction format and codifies alternative routes for domestic and cross-border commercial transactions.

Supply Chain Unbundling and Institutional Governance

The regulatory overhaul introduces strict measures to eliminate vertical integration within the coffee marketing and processing chain. The legal framework establishes statutory separation across operational stages, explicitly prohibiting a single market participant from concurrently holding licenses across conflicting segments of the supply chain. Under these restrictions, entities are barred from simultaneously operating under combinations of licenses as a buyer, miller, broker, or roaster.

Alongside behavioral and licensing restrictions on commercial operators, the Coffee Act 2026 enacts substantial institutional changes. It re-establishes the Coffee Board of Kenya as an autonomous, standalone industry regulator, rescinding the sectoral oversight previously held under the Agriculture and Food Authority (AFA) Coffee Directorate. Furthermore, the legislation establishes the Coffee Research and Training Institute to institutionalize agronomic research and specialized technical training across the sector.

Accelerated Disbursements via the Direct Settlement System

The transition to the operational regime of the Coffee Act 2026 also encompasses financial clearing mandates governing transaction settlements. The regulatory framework relies on the Direct Settlement System (DSS) to administer payment disbursements arising from commercial coffee trades.

The system is structured to correct structural settlement delays within the traditional marketing chain. Under the regulatory provisions operationalized through the DSS, payment flows are calibrated to ensure trade disbursements reach coffee farmers within five days of procurement. This settlement architecture applies rigorous clearing requirements across all recognized marketing avenues to guarantee direct financial access and expedited liquidity for producers.