Commodities

Coffee earnings jump by Sh10bn in 11 months on back of high volumes

coffee

A farmer in Tuiyo, Kapseret Constituency of Uasin Gishu County during harvesting of ripe berries on September 25, 2021. PHOTO | JARED NYATAYA | NMG

Kenya’s coffee earnings in the 11 months to August 2022 increased by Sh9.8 billion ($81 million) boosted by higher volumes and better prices in the international market on the back of a shortfall in supply from leading producer Brazil.

Data from the Nairobi Coffee Exchange (NCE) shows returns in the period hit Sh25.2 billion ($210 million) compared to Sh15.5 billion ($129 million) in the 11 months to August 2021.

The coffee season in Kenya starts in October, hence the reporting of earnings being pegged to that month.

The number of bags sold through the auction grew by 52.58 percent from 377,204 in the previous season to 575,543 as at the end of the review period. The average price per kilogramme increased from $279.41 last year to $297.73 per 50-kilogramme bag this year.

“Due to the increased volume and higher price, the value generated in the current season went up by $80.9 million to $210.7 million from $129.8 million in the previous period,” said Daniel Mbithi, chief executive officer NCE.

The improved performance was also influenced by a global supply shortage caused by frost in Brazil and bad weather in Colombia that impacted the crop negatively.

Brazil has been facing record crop failures due to cold weather and drought, and in Colombia, rains destroyed part of the crops while Ethiopia witnessed instability in the Oromo region, impacting production.

Brazil and Colombia are the world’s largest producers of coffee and a shortage caused by adverse weather benefited local farmers last year as the price of the beverage remained steady despite Covid-19 scourge that hit other commodities such as tea.

The pandemic cut demand for tea globally, a move that saw the price of the commodity remain law in the last two years.

In the weekly auction, the coffee price has been unstable in recent days in what NCE attributed to lower prices at the New York Exchange where the country sells over 90 percent of its produce.

Kenya’s coffee is also of higher quality compared to most other exporters and is therefore sought by roasters to blend with lower quality beans from elsewhere in the world.

The country, however, exports most of its coffee as cleaned beans, with only five percent shipped as roasted coffee, therefore missing out on the added value from selling roasted and packaged coffee.

[email protected]