KENYA – Kenya has recorded a 3 percent surge in coffee prices during the recent auction as concerns of a global shortage fueled by adverse weather conditions affecting Brazilian crop yields continue to escalate.
The surge, which saw the price of coffee reaching US$245 per unit, resulted in a significant boost to farmers’ overall earnings for the week, totalling US$10 million.
During this week’s auction, both arabica and robusta coffee prices experienced substantial increases in the world market, with arabica hitting a one-month high and robusta reaching an unprecedented peak.
The market momentum was driven by concerns over the potential impact of heavy rains in Brazil’s key coffee-producing regions, particularly in the Minas Gerais region, which accounts for approximately 30 percent of Brazil’s arabica production.
The increase in prices translated into commendable growth in the overall sales value, climbing from US$7 million in the previous sale to an impressive US$10.2 million.
Notably, Kenya’s premier coffee-grade AA witnessed a spike in value, with a 50-kilo bag commanding US$315 compared to the previous sale’s US$313.
Similarly, Grade AB experienced an increase, fetching US$247 per bag, up from the preceding US$237.
This comes when the government of Kenya continues to advocate for coffee reforms aimed at increasing farmers’ earnings by eliminating brokers along the value chain.
Kenya primarily sells up to 95 percent of its total production to the world market, with only five percent allocated for local consumption.
However, the surge in coffee earnings comes amid calls for government intervention to halt the issuance of milling licenses to entities holding buying permits by coffee farmers in the region.
Concerns have been raised regarding the involvement of certain “cartels” within the industry, who are believed to be working to undermine state-led reforms by disrupting farmers’ direct access to auctions.
The National Coffee Co-operative Union (NACCU) has expressed alarm over the licensing of commercial millers, citing instances where county governments have issued permits to entities affiliated with buyers.
According to NACCU, such actions violate regulations set forth in the Crops (Coffee) (General) Regulations 2019.
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