1 March 2017

Kenya: Coffee Price Drops 17pc As Low Quality Beans Hit Nairobi Exchange

Coffee prices at the Nairobi auction declined by 17.3 per cent in this week's sales, weighed down by low quality berries as the main harvest season comes to a close.

A market report from Nairobi Coffee Exchange (NCE) indicates that a 50 kilogramme bag of coffee was sold at Sh26,059 this week, down from Sh31,518 in the previous sale.

This is one of the bigger price slides that the auction has experienced in the fifteen sales done this year, and is only the second time this year that the commodity has shed value.

NCE chief executive officer Daniel Mbithi said the main growing areas of Central Kenya were coming towards the end of the main harvesting season.

"We witnessed an increase in the volumes of low quality coffee at the auction and this is what reduced the price to the current lows," said Mr Mbithi.

"Marketers normally release the best grade to the auction and after they are done with that catalogue is when they bring in the low quality ones.

There is therefore unlikely to be much improvement (in quality) in the coming auctions."

The auction has been enjoying high volumes of good quality coffee from farmers in the last two months coming in from Central Kenya. The next crop that will bring in quality coffee is expected at the auction in July.

However, this will not be a major harvest season, and hence it will not offer higher volumes.

Grade AA, Kenya's best coffee declined in value to sale at Sh34,608 this week on Tuesday down from Sh40,685 last week.

Last week, coffee prices had increased by nearly five per cent to hit the highest price recorded in more than five years.

Coffee remains a major cash crop and top foreign exchange earner for the Kenyan economy and is ranked the fifth largest contributor after horticulture, tourism, tea and diaspora remittances.

The industry contributes about 0.2 per cent of the national GDP, about eight per cent of the total agricultural export earnings and up to 25 per cent of the total labour force employed in agriculture.

Kenya exports over 90 per cent of the coffee produced locally, with the commodity in high demand overseas due to its higher quality that sees roasters blend it with coffee from other countries that are of lower quality.

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