Kenya’s monthly coffee earnings sink 24% to US$76.98m as global glut persists

KENYA – Kenya’s Coffee earnings have continued to record a decline as the country’s March 2019 sales plunged 24% to US$76.98 million (Sh7.8 bn) against US$102.65 million (Sh10.4bn) realised in the same period last year, data from the Coffee Directorate reveals.

Daniel Mbithi , chief executive at Nairobi Coffee Exchange said that the decline in earnings was majorly attributed to high production of Arabica in Brazil, which is a leading producer in the world, pushing the commodity price down.

Mr Mbithi said this was reflected by a downward shift in the average price at the auction with a 50 bag dropping 21%  to US$190.49 (Sh19,300) from US$242.8 (Sh24,600) previously.

“These results were occasioned by the Futures market at Intercontinental Exchange (ICE) in New York where it plummeted to a 13-year low of 91 US cents per pound.

“Brazil, which is the largest producer of Arabica coffee (which Kenya produces), has had a bumper harvest producing over 10 million 60-kilo bags more,” said Mr Mbithi.

He noted that the high volumes were coupled by a weaker local currency to the US dollar leading to a surplus in the market and therefore suppressing prices reports Business Daily.

“This led to global prices tumbling affecting all the coffee producing countries in almost equal measure. It is predicted that this may ease a bit on increased consumption levels of about 2.5 percent annually that will cut on surplus in the market,” he added.

Kenya consumes about 5% of its locally produced coffee and exports about 95% of the commodity to the international market, a situation that makes the country’s coffee vulnerable to price volatility.

The recent instability in global coffee prices comes at time when the exchange seeks to raise the amount of coffee roasted locally from 5 to 10 percent annually over the next five years.

The country has some of the best coffees, highly sought-after by roasters for blending with low quality which has seen local millers engage international buyers through direct coffee trade in a move to cushion the commodity against major global price fluctuations.

However, Kenya’s production has also significantly dropped compared to its East African counterparts like Uganda which has now widened the production gap.

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