Investors coming into Kenyan coffee often want to own more of the chain: mill the parchment, warehouse the clean coffee, buy at auction and export. The Coffee Act (No. 8 of 2026) makes that much harder. Section 28 stops a licensed coffee buyer and its associated entities from milling, broking, roasting, acting as an agent or running a warehouse, and stops a commercial miller from buying, broking, roasting or acting as an agent. This article explains what the restrictions say, the drafting gaps that make them harder to apply, and how an investor can structure a coffee business around them.
What section 28 prohibits
Two subsections do the work. Section 28(5) provides that the holder of a coffee buyer’s licence, or an entity associated with the holder, shall not carry on the business of a commercial miller, broker, roaster, agent or warehouse operator. Section 28(7) provides that the holder of a commercial miller’s licence, or any other entity associated with that holder, shall not carry on the business of a buyer, broker, roaster or agent.
Section 28(6) adds a separate limit: a buyer’s licence shall not be construed as authorising a person to engage in direct sale of coffee. Under section 2, a direct sale is a contract between a registered grower, co-operative society, coffee union, grower-miller or estate and an overseas buyer for the sale of its own clean coffee. Direct sales are therefore a grower’s channel. A buyer that wants to deal with growers outside the exchange cannot rely on its buyer’s licence to do so.
Section 28(8) then bars a licensing authority from issuing a licence whose effect would contravene subsection (6) or (7). The practical consequence of breaching the restrictions is therefore regulatory (see our overview of penalties under the Coffee Act): a licence application can be refused, and a licence held in breach can be cancelled for failure to comply with the licensing legislation (section 36).
The drafting gaps
Three features of section 28 make it harder to apply than it first appears. We cover these alongside other problems in our note on drafting gaps in the Coffee Act.
“Associated” is not defined. The interpretation section of the Act contains no definition of an associated entity or associated person. It is unclear whether association means common shareholding above a threshold, common directors, a parent and subsidiary relationship, a contractual relationship such as a long-term offtake, or some combination. The safest working assumption is that any material common ownership or control between two licensees will be treated as association.
The cross-references do not line up. Section 28(8) bars licences that would contravene subsections (6) and (7), but says nothing about subsection (5), which is the buyer-side restriction. Section 28(9), which carries a fine of up to KES 1 million or twice the value of the coffee, imprisonment of up to two years, or both, penalises contravention of subsection (1), the duty to apply for a licence, rather than subsections (5) and (7). Read literally, that penalty does not attach to the integration restrictions. A court may read the provisions purposively, and licensing authorities will apply the restrictions at the application stage and on cancellation, so the gaps are not a safe basis for a structure.
The miller’s licensing authority is itself uncertain. The Second Schedule lists the commercial coffee miller’s licence as a Board licence, but section 25(1)(e) requires a county licence for a commercial coffee miller. An investor planning a milling business should expect to deal with both, as our map of who issues each coffee licence explains.
Structuring around the restrictions
There is no structure that removes the restrictions, but there are lawful ways to participate in more than one stage of the chain.
Choose the licensed role first. Decide whether the core business is buying and exporting, milling, or warehousing, and license the operating company for that role only. Everything else should be bought in as a service.
Contract for the other stages. A buyer that needs coffee milled or stored can contract with an unrelated licensed miller or warehouse operator. Section 71 requires every milling contract to be in writing, and requires a commercial miller to give the grower notice to attend milling, insure coffee in its custody, account for spillage and by-products, digitise its operations, file returns and meet the prescribed grades. Those duties fall on the miller, so a buyer contracting for milling is relying on a regulated counterparty.
Keep ownership and control genuinely separate. If an investor wants exposure to more than one stage, the safest route is a minority, non-controlling interest held with no shared directors, no shared management and arm’s-length contracts. Even then, because “associated” is undefined, the arrangement should be disclosed to the licensing authority at the application stage and its written view obtained.
Use the right sales channel. Section 72 allows coffee to be sold by auction at an exchange, by direct sale, through an international exchange or by any other method the Cabinet Secretary prescribes. Under section 73(1), a buyer, a roaster or a grower-miller licensed by the relevant authority, or a broker appointed by the grower, may trade at an exchange. Growers who want to sell direct to an overseas buyer must submit a sample to an exchange for price discovery first and achieve a price that compares favourably with the exchange price (section 73).
Why the restrictions exist
The evident purpose of the restrictions is to keep processing, warehousing and buying in separate hands, so that growers deal with independent service providers at each stage. The Act reinforces the point elsewhere: section 31 requires every licence holder to act in the best interest of coffee growers, and section 82 requires trading at an exchange to comply with the laws against unfair trading and anti-competitive practices. Licensing authorities can be expected to scrutinise group structures closely, especially in the first licensing cycles under the new Act.
How We Can Help
Clay & Associates Advocates advises investors and operators on structuring coffee businesses around the Coffee Act, including group reviews against section 28, milling and warehousing contracts, and disclosures to licensing authorities. See our guides to the coffee buyer’s licence and coffee processing and export in Kenya, and contact our Corporate & Commercial team to review a structure.
Sources: Coffee Act (No. 8 of 2026), Kenya Law, sections 2, 25, 28, 31, 36, 71, 72, 73, 82 and Second Schedule.
Frequently asked questions
Can a coffee buyer also own a coffee mill in Kenya?
Not through the same entity or an associated entity. Section 28(5) bars a buyer’s licence holder and its associated entities from carrying on business as a commercial miller.
What counts as an “associated” entity under the Coffee Act?
The Act does not say. Assume that material common ownership, common directors or control will be treated as association, and seek the licensing authority’s written view before applying.
Can a licensed buyer make direct sales?
No. Section 28(6) states that a buyer’s licence does not authorise direct sale of coffee. Direct sales are made by growers, co-operatives, unions, grower-millers or estates.
Can a buyer use a mill it does not own?
Yes. A buyer can contract with an unrelated licensed commercial miller under a written milling contract, as section 71 requires.
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This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.
