Kenya Coffee Act 2026: Key Changes, Licensing Rules and Compliance Requirements
Key Takeaway
Kenya’s Coffee Act, 2026 introduces a comprehensive overhaul of the legal and regulatory framework governing the coffee sector. The Act establishes new regulatory bodies, expands licensing requirements, restricts vertical integration, introduces new trading channels, and significantly increases penalties. Coffee sector participants must urgently review their structures, contracts and compliance frameworks to align with the new law.
What are the key changes under Kenya’s Coffee Act 2026?
The Coffee Act, 2026 (No. 8 of 2026) came into force on 27 March 2026, following Presidential assent on 13 March 2026. It replaces the framework under the Crops Act, 2013 and the Crops (Coffee) (General) Regulations, 2019, creating a sector-specific regulatory regime for Kenya’s coffee industry.
The reforms introduce enhanced oversight, new licensing structures and stricter compliance obligations across the coffee value chain.
New Governance Framework for Kenya’s Coffee Sector
The Act establishes two specialised institutions:
• the Coffee Board of Kenya, responsible for regulation and licensing; and
• the Coffee Research and Training Institute, responsible for research and development.
County governments now have an expanded mandate, including maintaining grower registers, issuing licences and permits, enforcing standards, and monitoring pest control. Counties may also enact county-specific legislation, potentially creating varied regulatory requirements across regions.
Licensing Requirements Under the Kenya Coffee Act 2026
The Act introduces a three-tier licensing regime involving:
• the Coffee Board;
• county governments; and
• the Capital Markets Authority (CMA).
Key developments include:
• introduction of 17 licence categories, significantly expanding regulatory coverage;
• licensing of coffee exchanges and brokers by the CMA under capital markets laws;
• a revised annual licensing cycle, with licences expiring on 30 June and renewals due by 1 June;
• non-transferability of licences; and
• free registration for coffee growers.
Vertical Integration Rules in Kenya’s Coffee Sector
The Act imposes strict separation across the coffee value chain, prohibiting entities from operating across multiple regulated roles (e.g. buyer, miller, broker or roaster).
These restrictions, now anchored in primary legislation, require businesses with integrated operations to review and potentially restructure their corporate arrangements. The absence of a definition for “associated entities” introduces additional interpretive and compliance risks.
Coffee Export and Trading Rules in Kenya
The Act expands trading options for Kenyan coffee to include:
• auction at a licensed exchange;
• direct sales;
• international exchanges (new); and
• other methods prescribed by the Cabinet Secretary.
Direct sales are subject to quality assessment and price benchmarking through an exchange, while international transactions must comply with contractual and reporting requirements, including submission of agreements to the Coffee Board.
Coffee Development Levy and Sector Funding
A 2.5% Coffee Development and Marketing Levy is introduced on export/import value, allocated as follows:
• 30% – research and training;
• 25% – county development;
• 20% – price stabilisation;
• 15% – regulatory functions; and
• 10% – marketing.
This creates a structured and ring-fenced funding mechanism for the coffee sector.
Operational and Compliance Requirements for Coffee Businesses
The Act introduces enhanced obligations, including:
• implementation of a coffee traceability system;
• processing at designated, standard-approved facilities;
• mandatory written milling contracts with prescribed terms; and
• certification and reporting obligations for market participants.
Penalties and Liability Under the Kenya Coffee Act 2026
The Act significantly increases penalties for non-compliance, including:
• fines of up to KES 2 million or twice the value of the coffee;
• imprisonment for up to five years; and
• personal liability for directors and officers, subject to due diligence defences.
Dispute Resolution Framework
The Act establishes Dispute Resolution Committees under each licensing authority. These committees are required to issue decisions within 30 days, with appeals lying to the High Court.
Transitional Considerations and Legal Uncertainty
Existing licences and rights under the previous regime remain valid. However, the Act does not expressly repeal the 2019 Coffee Regulations, creating potential uncertainty where inconsistencies arise. Businesses should seek legal guidance on transitional compliance.
Implications for Coffee Sector Stakeholders
Industry participants should prioritise:
• reviewing corporate structures for compliance with vertical integration rules;
• updating licensing and renewal processes;
• revising commercial and milling contracts;
• strengthening compliance frameworks in light of increased penalties; and
• engaging with the Coffee Board, CMA and county governments on regulatory requirements.
Conclusion
The Kenya Coffee Act 2026 marks a significant shift in the regulation of the coffee sector, introducing stricter oversight, expanded licensing requirements and enhanced enforcement mechanisms. Proactive compliance and early engagement with the new framework will be critical for managing legal risk and ensuring operational continuity.
This alert serves the purpose of general guidance and does not constitute specific legal advice. For tailored advice, please contact our Partners at Julius.Wako@CMS-DI.com, and Jacinta.Ngumo@CMS-DI.com.
