In many coffee-producing regions, particularly in Kenya, the relationship between coffee mills and brokers is currently a major point of tension and regulatory reform.
Historically, it has been true that many commercial coffee mills were owned by or affiliated with coffee brokers (or marketing agents). However, this is changing due to new laws designed to prevent “vertical integration“—where one company controls every step of the process from milling to selling.
Here is a breakdown of the current landscape:
- The Historical “Tie-In”
For decades, the coffee supply chain was dominated by a few large multinational and local entities. These companies often owned:
- The Mill: Where raw “parchment” coffee is processed into “clean” green beans.
- The Broker/Marketing Agent: The entity that represents the farmer at the auction.
- The Buyer: The entity that actually purchases the coffee at the auction.
Critics argued this created a conflict of interest, as the broker (who should get the best price for the farmer) might be the same company as the buyer (who wants the lowest price).
- The Move Toward Separation (Kenya Example)
In Kenya, the Crops (Coffee) (General) Regulations 2019 were introduced specifically to break this cycle. The law now states:
- Anti-Concentration: An entity licensed as a commercial miller cannot also be a broker.
- Direct Access: The goal is to allow farmers and cooperatives to mill their own coffee (Grower Millers) and even market it directly, reducing reliance on “middleman” brokers who also own processing facilities.
- Current Ownership Trends
While the law tries to separate these roles, the reality is a mix:
- Cooperative-Owned Mills: More farmers are joining together to build their own mills (e.g., Murang’a Coffee Mills). This keeps the milling profit and control in the hands of the growers.
- State-Owned Mills: In some regions, the government has revived state-owned milling (like the New KPCU in Kenya) to provide an alternative to private broker-affiliated mills.
- Private/Independent Mills: There are still many private commercial mills, though they now face stricter rules about being “affiliated” with the brokers who sell the coffee they process.
- Why Does It Matter?
The ownership of the mill is crucial because:
- Transparency: If a broker owns the mill, they control the “out-turn” (how much clean coffee comes out of the raw cherry). Farmers often worry about being cheated on the weight or quality grade during this “black box” stage.
- Costs: Independent or cooperative mills usually charge a flat fee, whereas broker-owned mills might have complex fee structures that eat into the farmer’s final payout.
Summary Table
| Ownership Type | Who Owns It? | Goal |
|—|—|—|
| Broker-Affiliated | Multinational/Trading Houses | Efficiency and supply chain control (becoming restricted by law). |
| Cooperative | Smallholder Farmer Groups | To retain value and ensure transparency for members. |
| Government/State | Public Entities | To provide a “safety net” and compete against private monopolies.