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Kenya: Coffee Board Bets On Online Trade to Boost Sales
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Business Daily (Nairobi)
5 May 2008
Posted to the web 5 May 2008
Allan Odhiambo
The Coffee Board of Kenya is exploring the possibility of starting the third window of coffee sales which involves selling the coffee online. This comes one year after opening of the second known as direct sales.
Sources said that the move is meant to ensure farmers get maximum benefits from the liberalised sector.
According to the board, the third window will take up a special category of high grade speciality coffees.
Once placed on the website, the high grade coffees will be open to any willing buyer in the world who bids highest.
Still in formulation stages, the new option of selling coffee will be tried and if successful, it will be rolled out nationally.
Currently, most of Kenya's top grade coffees are sold through the coffee auction which accounts for 95 per cent of the total coffee sold in the country. The remaining five per cent is sold directly to buyers through the direct sales.
According to coffee board's Michael Mungai, the second window has taken up most of the top quality coffees sold from the country.
"Speciality coffees have mostly been going through direct sales," said Mr Mungai. But in its first year of operation, the second window failed to meet the expectations of farmers and stakeholders.
This has been blamed on lack of capacity to carry out international trade by both commercial and grower marketing agents.
The second window has however picked in its second year and figures from the board show that about 20,000 bags of top grade coffee have been sold directly to foreign buyers so far for the year 2007/2008.
This marks a 100 per cent increase from the 10,000 bags which were sold through direct sales in 2006/2007.
Despite the marked increase, direct sales still remain far lower than the traditional auction system which managed to sell 259,219 bags of main grade, miscellaneous and unwashed coffee for the year 2007/2008.
But unlike the second window which targets specific buyers in specific buying countries, the third window will widen the possible market to include all willing buyers internationally.
"This would be an enhancement of the second window and would make it more competitive," said Mr Daniel Mbithi of Kenya Producers and Coffee Traders Association.
Mr Mbithi said transactions in the second window are only known by the buyer and seller, whereas the third window would increase the number of people who know the speciality coffees on sale and are able to bid for them thus increasing competition.
Experts say that with the renewed vigour injected into farms , sufficient quantities of high grade coffees will be produced for the third window.
Boosted by rising prices of coffee and increased support from government, coffee farmers in the country have renewed their efforts in improving quality and quantity of coffee produced. According to the chief lickerer, this has made the quality of Kenyan coffee to improve by 30 to 40 per cent since 2002.
"Top quality grades and qualities of coffee are increasing because of the renewed interest from farmers and promising prices from the auction and direct sales," said Mr Mungai.
Mr Mungai said speciality coffee is the way to go as Kenyan farmers returns to production of high quality coffees.
To boost production of the speciality coffees, the board has been educating farmers through workshops, seminars and extension services meant to improve their crops.
Coffee millers and marketers have also chipped in to assist farmers with farm inputs and production techniques meant to boost the quality of coffee.
The government also recently cleared loans worth Sh4.2 billion freeing farmers who were almost giving up on the crop.
This was followed up with the initiation of the Coffee Development Fund to help the farmers improve their coffee farms.
Despite these efforts, the current production which stood at 50,000 metric tones last year is still seen as insufficient to meet the demand for high quality coffees.
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