Women coffee farmers in Kenya
Credit Fairtrade Foundation
By Shem Oirere
Effects of climate change and poor governance strategies by coffee cooperatives in Kenya are impacting the performance of the coffee sector at a time when Covid-19 has already dented the performance of the country’s specialty export market.
Sub-optimal flowering of the nearly 178 million coffee producing trees in Kenya’s 29 growing counties due to intermittent rains in the first quarter of 2020 is likely to contribute to a stagnation in coffee production volumes estimated at 650,000 bags of 60kgs each according to the US Department of Agriculture (USDA).
Earlier, Kenya’s meteorological department said the country experienced “late onset and poor distribution of the long rains” in the last two months of the first quarter that negatively impacted “negatively on the agricultural sector leading to food insecurity.”
“This is because the long rainy season constitutes an important rainfall season in Kenya and more so in the Western, Rift Valley, and Central regions,” the department said in a previous weather update. The three regions are leading coffee producers.
“This seasonal rainfall highly impacts on the agricultural sector in the country and hence, food security,” it said.
Kenya’s coffee production, which is nearly 1% of the total global output, has recorded decline in total exports that USDA expects to be around 620,000 60-kg bags for the 2020/2021 marketing year down from the 815,000 bags exported during the immediate previous season.
The share of Kenya’s coffee in markets such as US and South Korea slowed in 2019 with the US consumption of the Kenyan coffee, for example, dropping to 11.78% down from the 13.28% in 2018 and 18.72% in 2017. Although South Korea’s market share of the Kenyan coffee exports increased to 9.44% in 2018 from 6.43% in 2017, the volumes dropped again in 2019 to 6.51%.
However, the European Union market share (pre-Brexit) remained steady at more than 40%. The share was estimated at 40.18% in 2019 down from 43.68% in 2018 and 52.59% in 2017. Additionally, Switzerland’s market share of the Kenyan coffee recovered from the 2018 decline of 4.67% to stand at 5.62% in 2019. The figures are far below the 6.15% market share the country held in 2017.
Despite the mixed share uptake by Kenya’s major export market destinations, the East African country’s soluble imports are projected to increase by more than 16% to 35,000 bags up from 2019’s 30,000 bags. Similar growth is anticipated of the roast, ground domestic consumption that is also set to surge to 35,000 bags from 30,000 bags recorded last year according to USDA projections.
However, Kenya’s overall domestic coffee consumption is not all looking up in the coming year as soluble domestic intake is expected to be 25,000 bags down from the 35,000 bags of 2019. Overall, Kenya’s domestic coffee consumption is estimated at 60,000 bags in 2020/2021 marketing year, slightly lower than the average 65,000 bags for 2019 according to USDA report.
Currently, Kenya is set to revitalize its coffee sector and ensure quality production and achieve high grade commodity with the government lining up several initiatives including securing financing for coffee growers and refurbishing coffee processing facilities in some of the 29 coffee producing counties. For example, Kenya is sourcing nearly US$11.6 million for a two-year coffee sector revamping scheme that is part of the ongoing World Bank sponsored coffee revitalization program.
The financing, which is expected to be available by the end of 2020, is to fund acquisition of modern equipment for the factories and install new pulping lines to ensure high quality coffee for the export market.
“Once the World Bank provides the money, we will install fermentation tanks, drying beds, digital weighing scales, and modern pulping machines to make our factories efficient,” said Kenya’s Agriculture minister Peter Munya. The program, which is to be undertaken by the National Agricultural and Rural Inclusive Growth Project and the Kenya Climate Smart Agriculture Project shall entail “increasing coffee production, improving the efficiency of farmer co-operative societies, supporting research development and technology dissemination” according to a brief by Kenya’s ministry of agriculture, livestock, and fisheries.
“The other components of the program include supporting development of alternative coffee markets and project coordination,” the ministry says.
During the first phase of the coffee revitalization program, coffee growers in the counties of Kiambu, Machakos, Murang’a, Nyeri, Kirinyaga, Embu, Tharaka Nithi, and Meru, all which account for 70% of the national production with “a potential for quick wins through increased productivity”, are to benefit.
More coffee producing counties will benefit from the program during the second phase that Munya said will “focus on tangible outputs directed to coffee farmers to enhance more cash flows.”
Currently, Kenya is implementing a cherry advance program through which a US$26 million coffee cherry advance revolving fund has been created to enable advancing of working capital to coffee growers, who are affiliated to New Kenya Planters Cooperative Union, using their coffee deliveries to cooperative societies as collateral.
The fund, which is to get financing from monies appropriated by parliament, recoveries for the fund’s administration costs, grants, and donations among others, will enable smallholder farmers access capital equivalent to 40% of the prevailing average sales price at the Nairobi Coffee Exchange. The farmers can also access up to US$0.20 per kg of cherry delivered or 40% of the payment rate to members by a cooperative society in the previous crop year.
The cherry advance scheme is an improvement from the cash-on-delivery program piloted in 2017/2018 but which failed due to “low farm yields, high coffee price volatility and lack of a tight-proof mechanism guaranteeing full recovery of the advances.”
According to Munya, some coffee millers have contributed to the stagnation or decline in coffee production through “lying that farmers do not produce good quality coffee” so as to pay the growers less. He says the millers’ lies “have been debunked because most of what we receive (currently) at the mills is grade A and AB”. Grade A of Kenya coffee has beans with a screen size of 7.2 mm or approximately 18/64 of an inch and often receives a higher price than other grades. The grade is closely followed by AB with a screen size of 6.8 mm or 17/64 of an inch, with an average of 30% of Kenyan coffee assigned to it.
“The farmer must be invited to witness the milling and also have a say in the price of their coffee,” says Munya.
In 2019 the average coffee earnings decreased by 31.5% from KES14.8 billion to KES10.2 billion “mainly because of excess production of coffee globally, especially Brazil, which led to reduced average prices” according to Zachary Mwangi, director general of Kenya National Bureau of Statistics.
Kenyan coffee is marketed either by an estimated 46 dealers through the Nairobi Coffee Exchange or direct sales although reports on the coffee sector indicate there is little competition between these two selling channels because the buyers and dealers representing leading private foreign buyers are largely the same.
Elsewhere, the area under coffee production in Kenya slightly increased by 0.5% to 116.2 million hectares (ha) in 2019 from 115.6 million ha in 2017/18 due to new planting in the counties through the purchase and distribution of free coffee seedlings by Agriculture and Food Authority (AFA)-coffee directorate and county governments
Mwangi says the growth, “translates to a 1.5% growth in the area of coffee under (coffee) co-operatives.” The cooperatives represent all smallholder coffee growers in the country.
In the first half of 2020, Mwangi released a report indicating the total quantity of coffee produced increased by 8.7% from 41.4 million metric tons (mt) in 2017/18 to 45.0 million mt in 2018/19. “The increase mainly came from newly planted trees (three years back) coming into production coupled with the usual cyclic nature of coffee production,” he said.
Although there was a drop in the area under production for large scale producers or estates to 25.4 million ha in 2019 from 26.1 million in 2018/2019 ha, production shot up more than 28% to 14.1 million mt.
Mwangi says coffee yields for estates and cooperatives in 2019 increased by 27.5% and 0.9%, an equivalent of 543.2 kg/ha and 347.4 kg/ha respectively.
Meanwhile, the Covid-19 pandemic has jolted Kenya’s specialty market as the coffee’s destination markets imposed strict containment measures to control the disease.
USDA says the Covid-19 containment measures “could lead to disruption of already established specialty export markets.” The department predicts return to normalcy in coffee trading activities for the Kenya’s specialty segment if the pandemic is put under control by the end of 2020.