Kenyan coffee miller eyes Italy based Illycaffe SPA in supply deal

KENYA – Kenyan based coffee miller, Meru County Coffee Millers Co-operative Union (MCCMCU), said it is seeking to sell its coffee beans to the Italy based Illycaffe SPA as it seeks to expand its operations.

The miller, which trades its premium coffee beans through the Nairobi Coffee Exchange seeks the partnership with Illycaffe through direct exports of over 1000 tonnes of coffee beans.

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According Dancan Kiambia, executive officer at MCCMCU, the move is also expected to bolster farmers earnings who on average earn between US$0.45 (Sh45) per kilo and US$0.75 (Sh75) a kilo of coffee cherries delivered.

Business daily reports that Stefano Scanferla, from the Italian coffee roasting company, had visited the miller to sample the grades.

“By selling our coffee directly to the roaster we will eliminate the middleman, we expect our beans will fetch double the amount we get from the coffee exchange,” Mr Kiambia said.

He said that this year’s main crop, harvested between April and October, was likely to be sold to Illycaffe with farmers expected to earn a boom in December.

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The miller produced 1,600 tonnes of beans last year, earning US$7.99 million.

The move by the miller to seek direct sales has been hailed by the executive in charge of Tourism, Trade and Cooperatives, Maingi Mugambi, who said that the county government will also provide farm inputs to improve coffee grades.

“We committed to support the coffee farmer increase earnings and this is a major milestone.

Indications are that Illycaffe’s demand is more than our miller’s production and our major task is to seek ways to increase production,” Maingi said.

Meanwhile, Kenya’s coffee dropped 13% in four months to January 2019 to US$41 million against US$47.7 million in the same period last year on account of low prices for Arabica at the international market.

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According to Nairobi Coffee Exchange (NCE) chief executive, Daniel Mbithi, world market prices at ICE in New York, NCE’s benchmark for Arabica coffees, have been experiencing a 13-year low since November last year

Mbithi said this had affected the average price at the auction with a 50-kilogramme bag dropping from US$229.6 to US$189.68 in the review period.

Illycaffè SPA, mostly branded as illy, is an Italian coffee roasting company that specializes in the production of espresso and since its establishment in 1933, it has managed to grow its footprint worldwide in 140 countries.

In 2017, Illy posted a net profit of US$17.49 million and plans to increase its reported annual sales to about US$1.1 billion by 2027.

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