Once acclaimed as black gold, coffee loses its pricey aroma in Kenya

Farmers sort out coffee berries at Gachatha Coffee Society in Tetu early this year. Many small-holder farmers are abandoning the crop for better-yielding plants. (PHOTO: MOSE SAMMY/ STANDARD)

Coffee has fallen further down the list of the most important cash crops and was worth just Sh12 billion last year.

Artificially low selling prices for coffee beans have disillusioned farmers to ensure an increasingly diminished significance of a crop that was once Kenya’s biggest foreign-exchange earner.

In 2014, proceeds from the sale of coffee beans were estimated at Sh16.6 billion. The major slump last year is linked to mismanagement in farmers’ cooperatives.

“The decrease in production during the review period was mainly as a result of the high cost of labour, escalating costs of farm inputs and poor corporate governance at grower institutions,” Kenya National Bureau of Statistics reported in the Economic Survey 2016.

The finest grades of Kenyan coffee are the priciest in the world, being the most sought after for blending with inferior produce from other countries.

Average prices for the coffee beans were reported at Sh37.50 per kilo, which translates to about one per cent of the selling price in big cities like London.

In one instance, a buyer at the Borough retail market in Southwark, Central London, wondered in an online rant how much from the unit selling price of Sh4600 a kilo got to the farmer who cultivated the bushes in Kenya.

“Kenya top coffee beans retailing for £32/kg (about Sh4600 at the exchange rate of Sh145 to the British pound) in London Borough Market cafe. How much goes to the producer?,” posed Matina Stevis, an international correspondent for the Wall Street Journal.

She posted the photo of the coffee on sale at the market and the price tag that indicated the country of origin for the beans as “Kenya”.

Marketing agencies have been blamed for manipulating prices locally by keeping them artificially low through cartel-like tendencies. Their eventual selling price in international markets is multiplied severally ensuring they book abnormal profits at the expense of the farmer.

Rising input costs have translated to even thinner profits for farmers, if at all, pushing many to abandon the crop for better-yielding plants or even a complete change of career.

Small-holder farmers, who collectively controlled most of the production, have been worst hit.

Average production on small farms slumped by nearly a fifth last year alone to 317 kilos per hectare, which is significantly smaller when compared to the 590 kilos coffee estates on plantation farms produce.

Continued mismanagement has meant that farmers are not paid, often calling on the Government for bailouts. Nairobi Coffee Exchange Chief Executive Officer Daniel Mbithi acknowledged the complaints of depressed prices by farmers in an interview with The Standard.

He, however, said the performance of the coffee sector last year could have been worse were it not for the higher quality of produce. “It could have been worse with much lower earnings if we did not have quality coffee beans,” Mr Mbithi said. Higher quality varieties fetch commensurately higher prices.

Managers of coffee cooperatives have been in the middle of the pricing scams by exaggerating the cost of supplied inputs and even stealing coffee beans from storage.

Horticulture and tea are now two of the leading foreign-exchange earners, as tourism, the other key sector, falters on soaring insecurity threats.