KENYA – Kenya recorded a 20.3% decline in coffee export earnings to US$102 million (Shs10.2bn) at the end of the 2018/2019 crop year due to low prices at the international market.
According to a market report by the Nairobi Coffee Exchange (NCE), the earnings declined by US$2.6 million (Sh2.6bn) billion from Sh12.8 billion realised in 2018.
The exchanges’ chief executive officer, Daniel Mbithi, says that the low earnings resulted from a consistent trend in New York, where Kenya trades nearly all of its beans, reports Business Daily.
“The earnings dropped on account of the dipping in prices at New York terminal, which touched a record low of 86 US cents per pound in 2019 compared with a high of 120 last year,” said Mr Mbithi.
This subsequently pushed down the average price by 24.67 percent from US$210 (Sh21,000) as at the end of last crop season, to US$150 (Sh15,000) for a 50-kilo bag in the period under review.
However, the volume sold during the review period was up by 1.8 million tonnes compared with last year by the time main crop ended.
“The season 2018/2019 enjoyed a higher number of sales from 29 sales in 2017/2018 to 34 sales due to the higher volumes that were offered for sale,” he said.
As a net exporter of the commodity cultivated in about 109,795 hectares, coffee earnings in the country are majorly driven by international prices.
The Coffee Directorate noted that increased local coffee consumption could enable the country to cut reliance on exports to cushion the price from external shocks.
The government has also unveiled plans of rejuvenating the sector after it recently announced a US$30 million financial package that is aimed at improving operations across 500 coffee milling factories.
The soft financing will be disseminated into coffee cooperative societies, which according to Cooperatives Principal Secretary, Ali Noor Ismail, the state has already embarked on auditing the cooperatives in order to pave way for a seamless process.
“Over 70 percent of the farmers are aggregated in cooperative societies and that is why we are auditing these entities so that we can use them in distributing the funds,” said Mr Noor.
The Cherry advance levy was announced last March and it is aimed at helping farmers to meet financial obligations after harvesting.