The adoption of alternative coffee marketing channels remains a challenge for growers in Kenya, partly due to the tough task of establishing market chains abroad.
Farmers have an option of selling their coffee directly to international buyers, or they could contract and authorise their marketing agents to sell through the weekly auctions on the Nairobi Coffee Exchange (NCE).
Data by the Coffee Directorate, however, shows that marketing through the NCE remains dominant, more than eight decades since the spot market system was formed.
Kenya still exports about 90 per cent of its coffee through the NCE, with the remainder sold directly.
The Coffee Directorate statistics shows that in the 2016/17 season some 6.26 million kilogrammes of coffee worth Sh4.57 billion was exported through the direct sale option.
This is an improvement from previous years but still trails the performance of sales through the weekly option.
According to the NCE, 8.18 million kilogrammes of coffee was sold directly to buyers abroad in 2013/14, compared to the previous season’s 3.72 million.
“The logistics involved in securing and retaining markets abroad is tedious and most farmers still prefer selling through the Nairobi coffee auction,” an official at the Agriculture ministry told the Business Daily.
“There are several players trying out the direct sales option but things haven’t been easy. There is hope for better tidings.”
Failed to clinch markets
Struggles on direct-coffee marketing were underlined in 2014 when the then administration of Nyeri County failed to secure direct export markets.
Nyeri farmers had stopped taking their produce to the exchange in early 2014 after the county government promised to find alternative markets for them abroad.
Most farmers in Nyeri, however, failed to secure orders under the direct-sales system, leading to a massive crop pile-up.
The NCE was in the 2013/14 season forced to keep its weekly auctions open for a month longer to help Nyeri farmers sell produce they had planned to deliver to alternative markets, but failed.
The exchange was to close on May 20, 2014 in line with the traditional marketing calendar, but its managers extended the sessions to June 7.
But even as growers and traders worked to consolidate gains in the direct sales option, the performance of the NCE remained buoyant.
The value of coffee sold through the NCE in the year to September 2017 climbed to Sh16.39 billion from Sh15.33 billion the previous year, data from the auction shows, helped by firmer prices.
The average price of coffee sold through the auction was up 20 per cent in the full year to September compared to the previous year, lifted by the effects of prolonged drought that hit output in key growing areas.
A 50-kilogramme bag fetched an average Sh23,999 in the marketing season ended last month compared to Sh19,982 over a similar window the previous year, data by the auction managers shows.
The volume trade, however, fell to 34,092 metric tonnes in the ended 2016/17 season from 38,376 tonnes the previous year, an equivalent of 11.32 per cent drop.