Money Markets

Value of coffee up 69pc in Q4 as direct exports, high yields lift income

Nairobi Coffee Exchange chief executive Daniel Mbithi. PHOTO | FILE
Nairobi Coffee Exchange chief executive Daniel Mbithi. PHOTO | FILE 

The value of Kenyan coffee rose 69 per cent in the three months to December partly due to a price increase of nearly one third.

The surge in earnings was also explained by a rise in direct sales abroad and improved productivity.

The beverage earned the country Sh2.6 billion between October and December compared with Sh1.5 billion realised in the corresponding period in 2015.

The average price of a 50-kilogramme bag of coffee rose to Sh22,000 last year from Sh17,300 in 2015 representing a 30 per cent growth.

“Gross Value realised marked an increase of 69 per cent from Sh1.5 billion to Sh2.6 billion,” said Nairobi Coffee Exchange chief executive Daniel Mbithi.

According to Mr Mbithi production increased by 30 per cent from 70,000 60-kilogramme bags to 91,335, pushing up the sales.

Agriculture and Food Authority (AFA) chief executive Alfred Busolo said the second window, normally referred to as direct sales, played a key role in improving the value of one of the Kenya’s major export crops.

“The good returns from coffee is attributed to direct sales in the export market that saw the value of our crop go up significantly,” he said.

About 15 per cent of the Kenyan coffee was sold directly to overseas market last year while the rest went through the auction.

READ: Top global coffee buyers eye direct sales with farmers

A 50-kilogramme bag of coffee sold directly to the US attracts an average of Sh30,000 compared with about Sh23,000 fetched at the Nairobi Coffee Exchange.

Coffee sold at the auction comprises all the grades as opposed to direct sales, where only high quality beans are sold though.

Last year, Germany, Belgium, US, Sweden, Finland, Korea and Netherlands were among Kenya’s top buyers of the Kenyan commodity. The local coffee is one of the best in the world and is sought-after by roasters for blending.

Officials from the Specialty Coffee Association of America (SCAA) and representatives from Brazil, Colombia, Hong Kong, Myanmar and China were in Kenya last December to ink deals with the growers as they sought to increase the volumes sold through direct sales. Farmers save up to 20 per cent through direct sales by avoiding remission of fees to cooperatives and other agencies.

In April, Kenya will have an opportunity to promote its coffee to more than 15,000 delegates expected to gather in Seattle, US, at the annual SCAA event, to promote its brand after it was chosen as a model country in cultivation of the crop.