Glut and price decline undercut price of premium Kenyan coffee

A farmer Gichira Komu tends to his unripe bare coffee berries after the leafs fell off following a prolonged cold spell leading .The crop will not ripen in the absence of the green leafs leading to heavy losses. [PHOTO;Munene Kamau/Standard]

Kenya sold coffee worth Sh14.5 billion at the auction this year, which was lower than the Sh15.9 billion realised last year.

This was on the back of high volumes of the produce and low international prices that affected farmers’ earning.

Latest figures show that the value of coffee sold at the Nairobi Coffee Exchange (NCE) rose from $149 million (Sh14.9 billion) in 2016 to $159 million (Sh15.9 billion) in 2017 but has dropped back to $145 million (Sh14.5 billion) this year.

The total value of coffee exported as tracked by the Kenya Revenue Authority and the Central Bank of Kenya showed a similar trend where coffee exported in 2016 stood at $211 million (Sh21.1 billion) before rising to $240 million (Sh24 billion) last year.

This then rolled back to $225 million (Sh22.5 billion) this year.

“What we track is what is sold at the auction and goes to farmers. CBK tracks what is declared to KRA as per the values sold,” said NCE Chief Executive Daniel Mbithi in an interview.

First-class grades –AA, AB and PB since the start of the 2018/19 coffee year in October earned the highest prices during the auction held on Tuesday this week.

Dry spell

The average price of coffee offered for sale reached $201.77 (Sh20,580.54 ) on Tuesday compared with $180.08 (Sh18,368.16) per 50kg bag last week. During this week’s auction, coffee worth $3,606,373.56 (Sh360 million) was offered for sale.

Unlike last year where the rainfall was above the 10-year average of 170mm, this year scenario has been characterised by low rainfall.

NCE said prices are likely to increase further in coming sales following delivery of quality beans from Mt Kenya and other regions. 

Premium grade

Sasini General Manager Coffee Operations James Muriithi said Coffee farmers from Kiambu, Bungoma and Nyeri counties earned high prices for the premium Grade AA coffee sold by the firm.

Gititu Factory farmers from Kiambu sold 42 bags of grade AA at $550 (Sh56,375) and 32 bags of Grade PB at $351 (Sh35, 977.50) per 50kg bag. Marua Factory under the Rutuma Farmers’ Co-operative Society from Nyeri County, on the other hand, traded 32 bags of Grade AA and nine bags of Grade AB at $451 (Sh46, 227 ) and $348 (Sh35,670) respectively.

They also earned $356 (Sh36,490) for every 50kg bag of Grade AB coffee sold during the period under review.

Chesiro Farmers’ Co-operative Society from Bungoma County, which had 33 bags of Grade AA coffee, raked in $427 (Sh43,767.50) per bag while Grade AB realised $350 (Sh35,875) per 50kg bag.

This comes at a time when the Government is drafting a new law to limit the sale of raw tea and coffee beans to encourage industrialisation.

Industry, Trade and Cooperative Cabinet Secretary Peter Munya said on Wednesday the proposed law would aim to compel players in the two sectors to make value addition a part of their production processes.