Kenya’s coffee exports benefit from lucrative markets, premium prices fetching US$203m in 2019/2020

KENYA – Kenya’s coffee variety has continued to attract buyers across the globe fetching Ksh22 billion (US$203m) in the 2019/2020 Market Year from the export of 46,333 metric tons of green bean equivalent.

This was revealed by the Agriculture Cabinet Secretary Peter Munya during the launch of the Coffee report 2021, indicating it was a 285 percent increase in coffee export earnings from Ksh.5.7billion realized in 2003/2004.

Despite, Kenya’s coffee gaining market in the lucrative markets and fetching premium prices, the country’s productivity of the cash-crop has been dwindling over the years.

According to reports by Kenya News Agency, acreage under coffee production in the country has decreased by over 30 percent from about 170,000 hectares in early 1990s to about 119,000 hectares currently.

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In terms of production, the crop’s output level has also decreased by a whopping 70 percent from a peak of 129,000 metric tons in 1983/84 coffee year to about 40,000 metric tons currently.

“This Coffee Report 2021, is another milestone towards concertizing the on-going reforms in the coffee sector in the country that are aimed at improving efficiency in the performance of the sector and earnings to coffee farmers,” the CS said.

Munya however acknowledged that the good performance of the coffee sector began to deteriorate in the mid-1990s mainly due to poor governance, bad management and corruption that permeated the entire coffee value chain.

“This Coffee Report 2021, is another milestone towards concertizing the on-going reforms in the coffee sector in the country that are aimed at improving efficiency in the performance of the sector and earnings to coffee farmers.”

Agriculture Cabinet Secretary – Peter Munya

Kenya’s new Coffee Bill to streamline coffee value chain operations

To this end, the ministry is currently in the processes of passing a new proposed Coffee Bill into law, which seeks to streamline operations as administrative, policy and legal reforms in the coffee sector have been mooted.

The administrative coffee sector reforms will revolve around revival of New KPCU after liquidation of the old KPCU that was in receivership, take-over and operationalization of Meru and Sagana Coffee Milling Plants and inculcation of transparency and accountability in all milling processes at New KPCU plants.

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According to the new drafted laws, millers and market agents are prohibits from lending to farmers as a Kshs. 3 Billion (US$29.5m) Cherry Advance Fund was created earlier last year, specifically for funding purposes.

This is in response to the high-interest rates that the farmers have been subjected to from exorbitant advances.

To this end the newly formed fund lends at 3% and farmers have been further advised to obtained financing from their SACCOs or licensed commercial banks.

Further to that, the bill proposes that independent factories can apply to become stand-alone societies under the co-operative societies act if they so wish or if their members want them to be registered as such.

According to the new drafted laws, it seeks for the establishment of the direct settlement system (DSS) to act as the clearinghouse for receipt and disbursement of payment from coffee sales.

DSS is important as it will freely avail information on earnings from all coffees sold from Kenya by all marketing agents through both auction and direct sales through the establishment of the Nairobi Coffee Exchange.

In addition, it will enable payments to all coffee value chain players (farmers, factories/societies, millers, marketing agents, auction organizers) to be done directly and transparently to their accounts.

To ensure fair pay to farmers, the bill has also capped the milling fee at US$40 per ton and capped milling losses at 18%.

The bill also re-establishes the Coffee Research Foundation as the Coffee Research Institute which will be autonomous in its operations, implementation of programs, and in the allocation and management of its resources.

It will be the lead agency in coffee breeding; in the developing climate-resilient coffee crop varieties and in leading the scientific effort to strengthen Kenya coffee’s resistance to diseases and pests.

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