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Coffee value addition at EPZ boosts farmers

BUSINESS
By Vivianne Wandera | September 19th 2021

Trade and Industrialisation Cabinet Secretary Betty Maina when she toured the Athi River EPZ. [Courtesy]

Coffee has been one of Kenya’s largest exports since its introduction in the country over a century ago.

The total area under the crop is estimated to be 160,000 hectares, about one third of it in large plantations and the rest held by around 700,000 smallholder farmers.

However, according to the 2021 Economic Survey, the sector dipped by about 18 per cent on lower crop yields, mainly due to the harsh effects of the coronavirus pandemic.

The survey indicates that coffee output was recorded at 36,000 tonnes in the 2019-20 season, a decline from 45,000 tonnes the previous year.

During this period, coffee production by co-operatives decreased by 16.2 per cent while that of estates also decreased by 22.5 per cent.

At the same time, however, the export prices of unroasted coffee rose from Sh416.70 per kilogramme in 2019 to Sh512.40 in 2020.

Trade and Industrialisation Cabinet Secretary Betty Maina says farmers should take advantage of the facilities that the private sector and the government have put up at Export Processing Zones (EPZ) to get value for their produce.

“We don’t want anybody to get idle, which is the reason why we have invested in negotiating a free trade agreement with the US government because we require this certainty of market,” she said during a visit to the Africa Coffee Roasters (ACR) factory in Athi River EPZ on Thursday.

“We have also negotiated similar terms of the goods we produce in Kenya in our trade agreement with the United Kingdom and Europe.” 

ACR is a Danish company that exports roasted coffee to countries including Denmark, Finland, Holland, Germany and Russia, and also sells some in the local market.

Chief executive Jacob Elsborg said by roasting and packing locally, the company has the shortest possible value chain from farmers to the end consumer.

After the products leave ACR, they go directly to the final warehouse and then to shops.

“We are supporting smallholder farmers by giving them fair and on time payments, and are dedicated to several projects which help the farmers increase their income,” Mr Elsborg said.

“One example of that is the Trace Kenya project funded by Danida in Denmark and a partnership between Solidaridad (NGO) and ACR, helping 15,000 smallholder farmers in Kenya to convert from conventional farming to organic certified farming, which attracts a price premium.”

Despite the disruptions in the coffee industry caused by the pandemic, ACR has increased volumes and their turnover significantly, the CEO said.

Part of the growth comes from sourcing coffee from other regions and being in the EPZ has allowed the company to bring in coffee from Latin America to be processed in Kenya.

“The market in places like Europe demands coffee from all over the world. If we did not import green coffee from Latin America, jobs in Kenya would be lost and export would decline,” Elsborg said.

“Processing foreign coffee here also allows the value addition to stay in Kenya, enabling Kenya to earn money on coffee from other countries.

The company says since starting operations in Kenya, it has paid more than $1 million (Sh110 million) in premiums back to farmers and exported more than 3,000 tonnes of roasted coffee. 

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