Reviving Nairobi Coffee Exchange: Does The current Surge in Auction Volumes Signal Sector Recovery?

A coffee farmer sorts coffee cherry after delivered her produce at Gacatha Coffee Factory in Nyeri,on November 13,2018. According to the Nairobi Coffee Exchange, the volumes of coffee has significantly increased this year as compared to same period last year. [KIbata Kihu, Standard]

After a prolonged period of low activity with millers and cooperatives shying away from the auction, the Nairobi Coffee Exchange (NCE) is experiencing a resurgence in coffee volumes presented at its auctions.

Over the last four weekly auctions, a notable influx of buyers has been observed, attributing the success to the stability backed by government support.

Insiders in the coffee sector note an increase in cooperatives and estates participating in the auction, a positive shift from the low volumes reported in August and September.

Leaders in the counties played a crucial role in advocating for the importance of the coffee auction, urging millers to return the produce to farmers for engagement with licensed brokers by the Capital Market Authority (CMA).

In the recent four sales, both international buyers and the number of coffee bags have seen an uptick, with Murang’a Societies contributing to the market through NKPCU and Alliance Berries Limited.

A total of 33,144 bags of coffee have been sold in the three weekly sales, generating Sh 927,822,991.5 ($6,185,486.61), with additional bags sold through the direct sale option.

The new coffee year, starting on October 1, has seen leaders from coffee-growing regions mobilising farmers to utilise the auction system for better returns.

Kigumo MP Joseph Munyoro lauds the growing participation, highlighting the dominance of Marumi and Irati cooperatives in the NCE. 

“On Tuesday, we had coffee from Marumi, and Irati cooperatives dominating the NCE and hope more will be brought in the near future,” said Munyoro.

Despite challenges, including Murang’a Coffee Dealers Limited’s limited activity, efforts are underway to address issues and build confidence in brokerage firms.

The government’s injection of Sh4 billion for cherry advance payment is expected to contribute to the sector’s revival.

The latest sales on November 1 and November 7 saw increased participation from privately-owned Alliance Berries Limited, Murang’a cooperatives, and estates, signaling a positive trend.

Peter Gikonyo, chair of the Kenya Coffee Producers Association and the NCE committee, acknowledges the impact of leaders’ efforts in mobilising farmers for auction participation.

“The auction floor has more activities as the trading is held weekly following delivery of more coffee from the cooperatives and estates,” said Gikonyo, who also chairs the NCE committee.

However, estate farmer Joseph Wambugu criticizes the national government for not addressing core issues affecting the sector, emphasising the need for investment in production to complement marketing efforts.

Amidst challenges, the renewed activity in the NCE auctions is a positive indicator of the sector’s recovery, with hopes for sustained momentum.

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