Coffee Act 2023 Kenya

The Coffee Act 2023 Kenya signed into law on March 13, 2026 is the most significant restructuring of the country’s coffee sector in a generation. Kenya grows coffee that specialty buyers in Amsterdam, Tokyo and New York pay extraordinary sums for bright, complex and traceable.

Yet the farmer who picked that cherry by hand, carried it to the factory gate and waited for payment has historically been the last person in the chain to benefit. That is the structural injustice this law is designed to end. Kenya’s coffee production has fallen from a peak of 130,000 metric tonnes to between 40,000 and 50,000 metric tonnes today not because the soil changed, but because the system surrounding the farmer failed them, season after season.

Kenya’s coffee production once stood at 130,000 metric tonnes a season. Today it sits between 40,000 and 50,000. That decline did not happen because Kenyan soil changed or because the rains failed systematically or because the farmer lost the knowledge to grow a good crop. It happened because for decades the system surrounding the farmer made coffee a frustrating, unreliable and poorly rewarded occupation. The new law is a legislative acknowledgement of that failure and an attempt to correct it at the root.

For years, the Agriculture and Food Authority has been the body responsible for regulating Kenya’s coffee sector. AFA is a multi-commodity regulator it also covers tea, pyrethrum, sugar and a range of other crops. Coffee farmers and industry leaders have long argued that this arrangement left the sector perpetually under-resourced and under-prioritised, squeezed between competing mandates and never receiving the focused institutional attention that a crop of its complexity and export value deserved.

The Coffee Act changes that by creating the Coffee Board of Kenya as a standalone, dedicated regulatory authority. The Board will carry full responsibility for licensing, market intelligence, farmer registration, sector strategy and the promotion of Kenyan coffee in domestic and international markets. It will operate as a corporate entity with its own leadership, budget and accountability structures not a department within a larger body, but an institution whose entire purpose is coffee.

Alongside it, the Act establishes a Coffee Research and Training Institute a dedicated research body that will take over scientific work previously distributed across KALRO and older research units. This institute will focus on disease management, new variety development, genetic resource preservation and the translation of research into practice at the farm level. Critically, it will hold custody of Kenya’s national coffee genome the genetic heritage that underpins the unique flavour characteristics that make Kenyan coffee irreplaceable in global specialty markets.

These two institutions together represent something Kenya’s coffee sector has never had: a complete, dedicated governance and research architecture built for one crop and accountable for its performance.

Every reform needs a funding engine. Previous attempts to revive the coffee sector have stalled partly because they relied on discretionary government budget allocations funds that could be redirected, delayed or cut without legal consequence.

The Coffee Act introduces a 2.5 percent Coffee Development and Marketing Levy charged on the value of all coffee moving in and out of the country. This is not voluntary, not subject to annual budget negotiations and not shared with other commodities. It is a dedicated, legally mandated revenue stream flowing directly into the sector that generated it.

The proceeds are distributed according to a defined formula. The Coffee Research and Training Institute receives 30 percent enough to run a serious research programme rather than a nominal one. County governments in coffee-growing areas receive 25 percent a direct financial incentive for local leadership to invest in the sector rather than treating it as a national responsibility. The remainder is divided between the Coffee Board’s operations and a Price Stabilisation Fund designed to protect farmers when global prices fall.

The stabilisation fund element deserves particular attention. Coffee prices are cyclical and volatile Kenya’s farmers have experienced boom years followed by prolonged troughs that wiped out the gains. A legally funded buffer against those troughs removes one of the most powerful disincentives to long-term investment in the crop. A farmer considering replanting an ageing coffee stand needs confidence that the revenue will still be there in three to five years. The stabilisation fund is meant to provide that confidence.

No part of the Coffee Act has generated more heat than the provisions governing how and when farmers get paid.

At the centre of the debate is the Direct Settlement System a payment architecture designed to send coffee sale proceeds directly into a farmer’s bank account within a defined number of days after the coffee is sold at the Nairobi Coffee Exchange. The principle is straightforward: eliminate the delays, eliminate the opacity, eliminate the intermediaries who have historically held farmer money for months at a time and sometimes used it for purposes that had nothing to do with the farmer’s benefit.

President Ruto himself stated publicly that payment delays in Kenya’s coffee value chain had stretched to six months and beyond a timeframe during which a farmer who had already delivered their crop had no money to buy food, pay school fees or invest in the next season’s production.

The DSS sounds like an unambiguous good. But its implementation has exposed a genuine tension that the law alone cannot resolve.

Cooperative societies the farmer-owned institutions that collect cherry, process it at their factories, aggregate it for sale and provide inputs, credit and extension services to their members argue that routing payment directly to individual farmers bypasses the very structures that make smallholder coffee farming viable.

A farmer who produces 150 kilograms of coffee in a season cannot negotiate with an international buyer, cannot access foreign currency management, cannot repair a pulping machine, cannot source certified inputs without the cooperative infrastructure behind them. When the cooperative’s cash flow is disrupted by DSS, its ability to provide those services collapses.

Murang’a cooperative leaders put it plainly: cooperatives carry outstanding debts that farmers are expected to service through their earnings. DSS, they argued, could leave those debts unpaid while also stripping cooperatives of the operational float they depend on.

The Kerugoya High Court agreed that the rollout moved too fast. A judge suspended the DSS implementation until May 20, 2026, ruling that fifteen coffee-growing counties had not been adequately consulted before the system was imposed on them. The government, facing that ruling and growing farmer opposition, softened its position acknowledging that the reform needed deeper engagement before it could be operationalised without destabilising the cooperatives it ultimately needs to function.

That court date in May is now one of the most consequential moments in the Coffee Act’s early implementation. If the government returns to court with evidence of genuine consultation and a revised model that works with cooperatives rather than around them, the DSS can move forward on stronger legal and social footing. If it returns with the same proposal and the same resistance, the payment reform which is the most direct benefit to the farmer risks being delayed or diluted further.

The irony of this reform moment is that it arrives when Kenya’s coffee is fetching the highest prices it has seen in a generation. Global Arabica prices surged through 2025 and into 2026, driven by supply shortfalls in Brazil and Vietnam and growing demand from new consuming markets, particularly China.

Kenya’s farmers earned more per kilogram in the 2024/2025 season than at any point in recent memory. Exports to some markets reached over KSh 349,000 per kilogram of green coffee a figure that would have been unthinkable five years ago. And production is forecast to rise by more than thirteen percent in the current season, partly because high prices are motivating farmers to invest more carefully in their trees.

This is good news. But it also means that the DSS suspension has left the biggest payday of many farmers’ lives being processed through the old system the one that the government itself has spent years calling opaque, slow and exploitative. Farmers in Kirinyaga and Nyeri are watching record prices at the exchange while waiting for money that the court case has made slower to arrive, not faster.

The urgency of fixing the payment system is therefore not abstract. It is the difference between a farmer who receives their boom earnings in time to replant, invest and expand and one who receives them after the season has passed and the opportunity is gone.

A signed law is the beginning of a process, not the end of one. The Coffee Board of Kenya still needs to be constituted with people who bring genuine industry knowledge and the independence to regulate without political interference. The Coffee Research and Training Institute needs to be operational before Kenya’s next planting window, with its research priorities driven by what farmers actually need in the field, not by institutional convenience.

The levy mechanism needs to be gazetted and collected consistently from day one, not subject to the delays that have historically plagued government revenue collection from agricultural sectors. The county allocations need to flow to county governments that have credible plans to invest them in coffee infrastructure, not into general budgets.

And the DSS conversation needs to be resolved in a way that serves the farmer without hollowing out the cooperative movement. The government’s instinct to get money to the farmer faster and more transparently is the right one. The cooperatives’ concern that speed at the expense of structure leaves the farmer worse off in the long run is also legitimate. These two positions are not irreconcilable. A properly designed DSS that works through cooperatives rather than past them, that protects farmer earnings while preserving cooperative cash flow, is achievable. It requires consultation, not confrontation.

Kenya’s coffee farmers have watched many reform cycles come and go. They have seen institutions created and left to atrophy, levies collected and poorly accounted for, payment systems announced and then quietly abandoned. The Coffee Act 2023 is better designed than most of what came before it. But it will be judged not by its provisions it will be judged by whether the farmer in Murang’a who delivers cherry this October receives their payment by November.