13 February 2018

Kenya: Coffee Earnings Drop 13% on Low International Prices

Coffee earnings dropped 13 per cent in the four months to January as low international prices affected local sales.

A market report by Nairobi Coffee Exchange (NCE) indicates the earnings dropped from Sh5.5 billion ($55) million in October last year to Sh4.7 billion ($47 million) in the period under review. Kenya's coffee is mainly traded at the New York Coffee Exchange and any change in price affects local earnings.

"The low price was caused by international prices plummeting to the lowest level in two years from as high of 150 cents per pound to the current 120 cents," said NCE chief executive Daniel Mbithi. The average price decreased from Sh25,500 ($255) to Sh23,300 ($230) per 50 kilogramme bag traded at the auction.

The volumes offered for sale also declined four per cent from 10.8 million kilos to 10.3 million kilos, with the drop attributed to delays of the beverage getting to the market towards the end of last year due to bad weather.

Coffee has been performing well since the beginning of the year though, with prices going up since the first auction of 2017.

The rally saw the value of a 50 kilogramme bag of the produce hit Sh26,418 in the latest sale held last Tuesday; the highest price in the past one year.

NCE had predicted a series of high prices following an increase in high quality coffee in the market. The value of Kenyan coffee had dropped by Sh422 million in the year to December 2017 on low- quality beans.

The report indicated that the value of the crop dropped to Sh2.2 billion last year from Sh2.6 billion the previous year.

Kenya plans to raise the amount of coffee roasted locally from five to 10 per cent annually over the next five years.

But even as Kenya seeks to expand both the local and international market, productivity of coffee per bush has dropped from 10 kilogrammes in the 1980s to two. The government is trying to lure farmers back to tending the crop.

Kenya

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