Kenya registers 24% decline in coffee earnings due to market disruptions

KENYA – The Kenyan coffee registered a 32% decline in volumes in eight months to May, dropping from 485,962 bags of 60 kilos to 326,383 bags kilos registered in a similar period last year on accounts of market disruption.

The low volumes offered at the trading floor was as a result of the closure of auction floor by the Health ministry as a mitigation measure to curb Covid-19, reports Business Daily.

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The decrease in volume resulted to a decline in earnings by Sh2.5 billion with Nairobi Coffee Exchange (NCE) data indicating that the cash crop fetched Sh7.8 billion in the review period, down from Sh10.3 billion in 2019.

NCE chief executive Daniel Mbithi said, “Due to the drastic drop in the volume of coffee traded at the exchange, the value also went down by 24.19 per cent.”

“The cause for the drop might be due to the disruptions at the trading floor in March, 2020 by the Ministry of Health due to the Covid-19 pandemic, which forced some marketing agents to sell some of the coffee through other marketing channels,” he added.

The average price per bag registered a significant jump to record Sh19,320 up from previous Sh17,220, boosted by good demand and high prices at the New York Exchange, where Kenya sells close to 95 per cent of its produce.

In other related news, the government of Kenya is in the process of establishing the commodities exchange market after Parliament passed the Warehouse Receipt System (WRS) Act, 2019, reports Kenyan News Agency.

The law is aimed at eliminating and reducing post-harvest losses as well as middlemen along the supply line chains.

This will be good news for coffee farmers who will now be able to follow and know when and how much their coffee has fetched in the online platform.

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The warehouse can allow them to sell the goods at a later time, when prices have picked up, thus avoiding the price risk.

The receipt system will also elaborate how the ownership of the document can be transferred, as well as the regulation of warehouses and actors associated in the processes.

The government is also in the process of distributing 140,000 seedlings to small-holders farmers across the coffee growing counties.

The Kenya Agricultural Livestock and Research Organization (KALRO) Director general Eliud Kireger said provision of adequate planting materials is set to tame the decreasing production and thus enhance the country’s profile internationally.

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