Kenya's Coffee Doldrums Despite Numerous Revival Efforts

The Kenyan government has set aside a Kshs 3 billion cherry fund kitty to allow coffee farmers to access the funds at an interest of 3 per cent per annum.

President Uhuru Kenyatta announced that this fund will be operational from July this year when he opened the first International Coffee Organisation (ICO) forum in Nairobi on March 26.

The event is the first to ever happen in Kenya with over 900 delegates from both exporting and importing countries as well as coffee marketers.

Why the International Coffee Organisation forum?

Stakeholders and delegates were to chart a way forward on various hurdles facing the coffee sector and also dialogue about revitalizing coffee production in Kenya.

Kenyatta said that the coffee industry has been slowed down by some challenges with the African market's share falling.

"Despite the premium prices that Kenyan coffee fetches internationally, the profits do not trickle down to the farmers. In this regard, my government is working to rehabilitate the declining coffee production."

But, will having these forums help save the crop which has declined more than 60 per cent in the country?

Kenya's coffee doldrums despite numerous revival efforts

Kenya, East Africa's economic hub has been struggling to revive the ailing coffee sector. The agricultural sub-sector has seen a 66 per cent production drop in the past 20 years.

The country's production declined from 130,000 tonnes in 1988 to 45, 000 tonnes in the 2016/2017 season according to a government report released last year.

Comparatively, Ethiopia improved greatly in both production and quality of coffee beans in the past five years.

Kenya improved slightly in the 2013/2014 and 2015/2016 season with experts attributing this to favourable weather.

Despite this, Kenya grew the least in the region at 3.2 per cent while Uganda had the highest at 36 per cent followed. Rwanda grew 17.6 per cent and Ethiopia saw a 16.3 per cent growth.

In Africa, the average growth of the coffee sector was 12.3 per cent.

Kenyatta's call despite coffee's fading glory

Kenya's Agriculture and Irrigation Cabinet Secretary Mwangi Kiunjuri said that his Ministry together with that of Trade are making a turnaround for coffee farmers by exploring policy solutions to enhance coffee farming in the Country.

Coffee Stakeholders believe that Kenya should revamp the brand image of coffee both locally and internationally to tackle the tough challenges facing the sector.

Among measures proposed to help improve the sector were co-branding with recognized coffee brands, ensuring product loyalty and enhancing healthy domestic markets and also adopting climate-smart practices for more coffee production among coffee farmers

Kenyatta emphasized the need to reduce the cost of processing and milling and ensuring youths and women inclusivity in coffee production.

"We should increase domestic consumption and global coffee consumption to enhance the coffee market," Kenyatta added.

ICO Director Jose Sette addresses delegates including Kenya's President Uhuru Kenyatta at the ICO Forum in Nairobi. He said Kenya has the potential to be a leader in the speciality coffee market in the world with its high-quality coffee as one of its most important assets. [Photo/Impact Africa]Developing domestic coffee consumption

ICO Director Jose Sette said that the ICO Meeting is set to demonstrate ongoing commitment to enhance coffee production in Kenya.

He added, "Kenya has the potential to be a leader in the speciality coffee market in the world with its high-quality coffee as one of its most important assets."

Sette explained that Kenya should develop domestic consumption throughout the continent as an example of membership.

He reiterated that the country should work towards increasing productivity, streamlining value chain, improving infrastructure and logistics, and also including young people in the coffee production and implementing structural reforms.

Farmers abandoning coffee due cartel influence

The bulk of coffee producers in Kenya are smallholder farmers who are the most affected by poor coffee prices.

These farmers have been forced to abandon the crop due to delayed payments on top of the poor returns from their coffee despite the costly inputs.

Farmers are replacing the coffee with other crops like avocado or macadamia trees since farming these has good returns.

For those who are tired of farming, they are turning their lands into housing estates as the demand for accommodation grows.

This is especially so in Kiambu which has for long been referred to as the Kenyan capital's bedroom since many people who work in the city reside in Kiambu.

Multinational corporations have formed cartels which dominate the coffee marketing chain and since Kenya's coffee is mainly sold through the Nairobi Coffee Auction, it is difficult to escape the cabals.

Conflict of interest disadvantaging coffee farmers

And, another problem is that the Coffee Directorate which is the industry's regulator licenses companies which could be owned by the same parties to handle the entire coffee trade chain.

The companies sell coffee on behalf of farmers worsening the situation since the same companies advance loans to the farmers' co-operative societies. This is a blatant conflict of interest.

In early 2017, a taskforce on coffee drafted regulations to address most of the problems but officials of the co-operative societies rejected the Coffee (General) Regulations, 2016.

The taskforce was forced to redraft the regulations after the so-called coffee co-operative societies moved to court blocking the implementation of the proposed regulations.

This was on grounds that the taskforce did not involve all stakeholders.

In 2018, the taskforce came up with an 'improved draft', the Coffee (General) Regulations, 2018, where double licensing for coffee traders was abolished. But, this is yet to become law.

This means that exploitation of farmers will continue as the same oppressive marketing structure remains.

You can also read how New York Coffee Exchange market prices hit Kenyan firm and Tanzania's coffee exports to Japan raking in USD 528,000 in 2017/18.

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