ADVOKS GLOBAL · KENYA
The Crops (Coffee) (General) Regulations
25. Management of the auction
Edition: 2022-12-31 · In force
25. Management of the auction
(1)The auction organizer shall manage the auction floor, central sample room, information registry and the direct settlement system, maintain records relating to coffee sales, coffee samples and sweepings, and avail sales catalogues to interested parties.(2)The proceeds of the sale of coffee by the auction shall, be deposited in a direct settlement system established in accordance with the laws that govern the auction.(3)The grower or the grower’s authorized representatives, shall after the commencement of these Regulations, supply through the auction all the necessary particulars of the grower to the commercial banks providing the direct settlement system to the grower, for purposes of initiating the settlement system(4)The grower or the grower’s authorized representatives shall through the auction organiser, lodge with the commercial banks providing the direct settlement system, any relevant contracts of service for which payment will be due from the grower, and any other document showing outstanding liabilities payable by the grower, for purposes of settlement through the system.(5)The particulars supplied shall take the format prescribed by Form P set out in the First Schedule.(6)The grower or the grower’s authorized representatives and the auction organizer shall ensure that the information provided under subregulations (3) and (4) herein above is correct and relevant and they shall be liable for any loss or other consequences resulting from any incorrect information given to appointed commercial banks providing the settlement system.(7)The Direct Settlement System provider shall remit coffee sales proceeds to the coffee growers and settle service provider’s fees and other liabilities within five working days from the receipt of the proceeds of sale of coffee.(8)All payments to growers for coffee sold and for services rendered for such coffee whether by miller-marketers, warehousemen, auction organizers, coffee societies and factories shall be paid into their individual accounts from the direct settlement system.(9)The trading of coffee at the auction shall be in accordance with these Regulations and any other laws that may govern the exchange and shall comprise the following—(a)a miller shall deposit clean and graded coffee at a designated licensed warehouse, and where the clean coffee is a bulk, the miller shall provide details of the bulk and the proportions of the respective growers’ coffee;(b)coffee shall meet the Kenya coffee quality standards for commodity trading at the exchange;(c)the warehouseman shall issue a coffee warrant in the form set out in the Eighth Schedule or transferable warehouse receipts as the case may be, stating the quantity and quality of the coffee deposited and ensure traceability of the coffee;(d)for purposes of sale, the grower miller or appointed broker shall input the details of the coffee warrant or warehouse receipt as the case may be, into the central registry of the exchange;(e)the warehouseman shall guarantee delivery of the coffee described in the coffee warrant or warehouse receipt as the case may be, and in the event of loss or failure of delivery, the warehouseman shall be liable;(f)the warehouseman or an appointed collateral manager shall confirm that the warehouse receipt or coffee warrant as the case may be, is valid by inspecting and auditing coffee in the warehouse;(g)upon verification, details in the information registry shall be confirmed into the central order book ready for trading;(h)the auction organizer in consultation with grower marketers or appointed miller marketers shall set the volumes, lot sizes, dates and times for holding of coffee auctions and determine the order of the sales catalogues for every sale and ensure that reasonable access to the auction is given to all persons licensed to trade;(i)the grower shall, either directly or in consultation with the miller marketer, set the reserve price for the coffee for every sale taking into account the quality of the coffee, the prevailing auction prices and the international production and market trends;(j)where a bid for coffee at the auction has not been confirmed, the grower miller or miller marketer shall disclose the reserve price at the trading floor and where the disclosure of the reserve price does not attract any competitive offers, the coffee shall be withdrawn and re-offered for sale at a subsequent auction;(k)all trading in coffee at the auction shall be concluded at the trading floor of the auction;(l)once auction is complete, successful bidders shall be invoiced by the grower miller or miller marketer and payments of the proceeds shall be effected to the grower through direct settlement system net of contract and statutory charges;(m)upon confirmation of payment by the direct settlement system and endorsement by the auction organizer, title to coffee shall be transferred to the buyer or roaster by changing ownership details in the coffee warrant or warehouse receipt, as the case may be, at the central registry;(n)the new owners will thereafter be at liberty to take delivery of the coffee; and(o)a coffee warrant or warehouse receipt as the case may be, issued by the warehouseman to a depositor of coffee shall be transferable to a new holder who has purchased the coffee and is entitled to take its delivery upon presentation of the coffee warrant or warehouse receipt endorsed by the auction organizer to the warehouseman.(10)Payments to factories or societies from the direct settlement system for operations and maintenance shall be five per centum of the value of coffee sold net of the milling, warehousing and marketing costs.(11)The auction organizer shall disseminate market information for every auction and an analysis of performance on, weekly and monthly basis.(12)The obligations of the auction and the direct settlement system provider shall be as set out in the coffee trading rules and these Regulations.(13)A commercial bank which express an interest towards establishment of a direct settlement system shall fulfil requirements stipulated under the Second under these Regulations.(14)The auction organizer shall enter into service agreements with commercial banks which qualify and are appointed to offer the services of direct settlement system services for the coffee subsector.(15)A commercial bank appointed to offer direct settlement services shall submit returns to the auction organizer.(16)A person who contravenes this regulation commits an offence.