Kenya’s coffee earnings surge on back of increased volume, higher commodity price

Uganda coffee export

KENYA – Kenya fetched US$130m in February from the export of 319,307 bags of coffee each weighing 60 kilogrammes.

This was both a rise in earnings and the exported volumes, as the monthly coffee value rose by 62.5% from US$80m registered the previous corresponding period last year when the country sold 218,928 bags.

The surge in earnings and realized exported amount is attributed to global shortage resulting from a bad crop in Latin America.

According to reports by Business Daily, the world’s leading coffee producers, Brazil and Colombia are experiencing harsh weather conditions which is negatively impacting the crop.

Meanwhile, Ethiopia, the world’s fifth-largest producer, saw farming activities interrupted by the conflict between the government and the militia in the Tigray region.

“Brazil has been facing record crop failures due to cold weather and drought. In Colombia, rains destroyed part of the crops, and Ethiopia was on the verge of a civil war, impacting on global production,” said Daniel Mbithi, chief executive officer Nairobi Coffee Exchange.

The good earnings were also boosted by growth in volumes, which were 46 percent higher in the review period compared with the previous season.

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Also, due to the global shortage, the commodity price surged with the average price of the commodity in the review period hitting a high of US$333 for a 50-kilo bag from an average of US$296 offered last year.

Despite the remarkable performance, Mr Mbithi highlighted that the coffee industry, like many others, is facing difficulties due to labour shortages caused by the Covid-19 pandemic, which has led to a global shipping crisis, affecting the movement of the produce.

“It is predicted that this trend may continue in the next one or two years,” he said.

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In a bid to avert the looming crisis which is likely to affect the country’s earnings from the green gold, Kenyan farmers are pursuit different avenues to gain access of the lucrative international markets.

Recently, Kenyan coffee farmers under the Kipkelion Coffee Cooperative Society, earned atleast Kshs. 102.6 million (US$902,700) after bagging the lucrative South Korean coffee market.

The farmers managed to directly ship 134.4 metric tonnes of coffee to Goodbeans, a processing company in the Asian nation, through their brokerage arm Kipkelion Brokerage Company.

The sale offered competitive prices for the produce from Kshs. 30 (US$0.26) to Kshs. 100 (US$0.88) per kilogram, and the direct sale also blocked-out middlemen.

This is in line with the Coffee Reforms of 2016 aimed at increasing value for farmers by cutting off unscrupulous traders who were accused of ripping off farmers.

Implementation of the reforms has seen the Capital Markets Authority mandated to license brokers who facilitate trade between farmers and buyers.

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