The Kenyan Government moved quickly to deny claims of widespread price fixing at coffee auctions yesterday but did concede that current licensing systems were negatively affecting the industry.
In response to the admission, the Government has started investigating interrelated firms within the coffee sector.
Led by The Daily Nation, the media in Kenya have recently uncovered the probable existence of cartels acting disingenuously within the auctioning process.
Government officials have previously shunned the idea of price fixing, despite evidence to the contrary.
Alfred Busolo, the interim Director General of the Agriculture, Fisheries and Food Authority (AFFA) admitted they were now looking at “potential conflict[s] of interest.”
“Related firms with different directors are being investigated on their likely impact on competitiveness in the value chain,” he continued.
Additionally, the AFFA were in the process of reviewing current licencing regulations to deter entities from dual registering.
Under current laws, merchants and companies could hold multiple licences and double up as dealers, millers and farm management agencies.
An investigation found that this had led to a degree of price-fixing within the industry.
However, William Gataei of the Kenya Planters Cooperative Union believes the situation is far worse.
“They negotiate between the same parties owned by the same company,” he told The Daily Nation.
“After they buy the commodity here, they all ship it to Geneva. They export the coffee to themselves. The effect of this is that with this transfer they won’t pay the right taxes here.”
Sadly, Mr. Busolo defended those linked with those alleged to be involved with this practice.
“The presence of multinational is a plus not a disgrace to the industry,” he is quoted as saying.