Economy

Top global coffee buyers eye direct sales with farmers

coffee

Coffee buyers from different parts of the world at a meeting in Nairobi on Nov 28, 2016. PHOTO | DIANA NGILA

Summary

  • The Specialty Coffee Association of America and representatives from Brazil, Colombia, Hong Kong, Myanmar and China are seeking to buy the commodity directly from farmers’ co-operatives.
  • Besides encouraging farmers to link up with foreign partners for direct sales, Kenya plans to increase coffee roasting to add value to its raw bean exports.

Top world coffee buyers are in Kenya to ink direct purchase deals with farmers and avoid the Nairobi Coffee Exchange, a move that will see growers earn Sh7,000 more per bag.

Officials from the Specialty Coffee Association of America and representatives from Brazil, Colombia, Hong Kong, Myanmar and China are seeking to buy the commodity directly from farmers’ co-operatives.

About 85 per cent of Kenya’s coffee is sold abroad through the Nairobi Coffee Exchange, a lengthy supply chain that has dimmed farmers’ earnings.

The Agriculture Food Authority (AFA) said a 50 kilogramme bag of coffee sold directly to the US fetches about Sh30,000 per bag, while the latest auction price is Sh23,000.

“Our farmers are going to benefit from higher prices resulting from the direct sales, which eliminates intermediary parties along the value chain,” said AFA director-general Alfred Busolo.

Kenya grows just one per cent of the world’s coffee a year, but punches above its weight in quality as many global firms seek its Arabica beans to blend with lower quality varieties.

The country produced 45,000 tonnes of beans in the 2015/16 season worth Sh20.6 billion and forecasts an output of 50,000 tonnes in 2016/17.

This is half the output of the peak recorded in the 1980s.Head of the US delegation Lisa Pacini noted that they are in the country to learn more about Kenyan coffee and interact with farmers as they seek to expand exports to their country.

“We are in Kenya to learn more about your coffee as we seek to expand the intake of the produce from farmers,’’ said Ms Pacini.

Besides encouraging farmers to link up with foreign partners for direct sales, Kenya plans to increase coffee roasting to add value to its raw bean exports.

READ: Farmers export batch of processed coffee to Europe

Most of the coffee is exported as cleaned beans and just five per cent is roasted hence Kenya misses out on the added value from selling roasted and packaged coffee.

It is seeking to raise the amount of coffee roasted locally by five to 10 per cent annually over the next five years.

A task force formed by President Uhuru Kenyatta to come up with solutions to problems facing the coffee farming sector had proposed that the government opens a second window to allow for direct sales.

Currently, only 15 per cent of Kenyan coffee is sold directly to the overseas market while the rest goes through the auction.

The Ministry of Agriculture is betting on the Sh5 billion Commodity Fund to issue cheap credit to coffee farmers in the latest bid to revive the once vibrant sector.

Productivity of coffee per bush has dropped from 10 kilogrammes to two kilogrammes.