What is the NCE, Nairobi Coffee Exchange, Kenya

Kenya has long been known for its multi-layered tastes and juicy acidity, and coffee lovers who often buy Kenyan coffee must have heard of Kenya's NCE institution, so what does it do?

NCE, known as Nairobi Coffee Exchange, or Nairobi Coffee Exchange, is a coffee trading platform set up by the Kenyan government, managed by the country's Foreign Exchange Commission and regulated by the Kenya Agriculture, Food and Fisheries Authority. It is a very important part of the coffee supply chain in Kenya.

NCE holds coffee auctions every Tuesday to provide buyers and sellers with a transparent and efficient place to trade coffee, where buyers can inspect and taste coffee before buying, while sellers can show their coffee to a wide range of buyers for sale.

The history of NCE dates back to the 1930s, when Kenya was still a British colony and most of the coffee plantations owned by the British. The Kenyan Coffee Commission (Coffee Board of Kenya) was set up under the leadership of the British, and the first auction was held in 1935, and a coffee grading system was established. After that, cooperatives were institutionalized, requiring the participation of small farmers, but to some extent weakened their industrial status, as most of the members of the coffee committee were local coffee ranchers at that time.

Until 1963, Kenyan independent plantation land was nationalized and redistributed. Cooperatives are authorized to receive loans of nearly $4 million for the expansion of processing capacity and the construction of new processing stations. That is why more than 75% of Kenya's coffee land is now cultivated by small farmers.

At present, after changes in recent years, farmers or cooperatives mainly export coffee to buyers in other countries through NCE auctions or direct sales.

After the coffee berries are harvested, they are sent to the processing station for processing, and then the raw coffee beans are handed over to marketing agents, who will grade all the products and prepare a catalogue, which will then be shown to the merchants who will participate in the upcoming weekly auction. The merchant may conduct a cup test at NCE in advance, and then at the auction, the buyer will bid for the desired coffee, and the highest bidder will get the batch of coffee.

However, after the businessman pays, the money will not be paid to producers such as farmers, but to marketing agents. After deducting the agency fee, the agent pays the fee for the coffee fruit to the farmer or cooperative. As a result, in the early years, the system was often criticized by producers and stakeholders because the process for farmers to obtain funds was so long that they sometimes had to wait nearly a year to be paid.

As a result, in 2006, the Kenyan government launched the second window (Second Window), under which producers can bypass NCE's auction platform and conduct business directly with buyers. However, 85 to 95 per cent of Kenyan coffee is still traded through NCE. Because of restrictions on dealers, small farmers' lack of access to external markets, and a deep-rooted cooperative alliance system, most coffee must be circulated through exchange auctions.

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