NKG, the world's largest coffee and raw bean trading company, announces the closure of its business in Kenya

Recently, according to local reports in Kenya, Neumann Kaffee Gruppe, the world's largest trader of raw coffee beans, referred to as NKG, announced the closure of its factory in Kenya, mainly due to failure to obtain a government license. It is understood that Neumann Kaffee Gruppe is the world's largest trader of raw coffee beans, has set up related companies or processing plants in 27 countries around the world, and has more than 60 subsidiaries.

It is said that NKG chose to close the factory after the implementation of the 2019 Coffee regulations and the 2020 Capital Markets (Coffee Exchange) regulations. With the introduction of these two regulations, the importance of transparency in coffee transactions has been taken into consideration. These laws provide for the management and supervision of coffee auctions and authorize the State sales Commission and brokers to act as sales agents for farmers. According to these regulations, all industry participants, including county governments, cooperatives and traders, must digitize their business to put an end to price manipulation by unscrupulous stakeholders.

However, after the implementation of the regulations, the regulation of the coffee industry in Kenya has changed, so NKG has so far been unable to obtain a license for the relevant business, so it has to stop the factory business and lay off some employees at the end of February.

And this is not the first company to be affected by the reform of Kenya's coffee industry. The Kenyan government has long intended to revive the coffee industry, so in January 2023, the Kenyan President passed Executive order No. 1 to the Vice President for coffee reform. The vice president will reform the coffee industry, including the introduction of a direct settlement system, and through a series of coffee bills proposing the transfer of regulatory and commercial roles from the Kenya Agriculture and Food Authority to the Kenya Coffee Commission to restructure the industry.

The reform led to a 99% drop in sales of Eaagads, a Kenyan coffee maker, in six months, resulting in a net loss of 33.1 million shillings. As a result, the company says these reforms have had a negative impact on its ability to sell coffee directly in accordance with traditional practices.

In response, industry insiders said that the Kenyan coffee reform has led to chaos in the industry due to delays in the issuance of sales and processing licenses. In the future, more coffee trading companies or factories may choose to close down because they do not have a license or sufficient inventory to do business.