Commodities

Coffee earns record Sh5.6bn on Brazil, Ethiopia troubles

coffee

A farmer tends to his coffee bushes in Nyeri town on November 9, 2021. PHOTO | JOSEPH KANYI | NMG

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Summary

  • Nairobi Coffee Exchange (NCE) said the earnings jumped 117.3 percent from $23 million (Sh2.6 billion) in the corresponding month a year earlier, buoyed by the challenges suffered by the two leading producers.
  • Brazil, which is the top world supplier, produces up to 60 million kilos of the beverage every year but the harsh weather conditions saw the Latin American nation lose up to 20 percent of its entire crop this season.

Monthly coffee earnings rose to a record $50 million (Sh5.6 billion) in December as Kenya reaped from the frost that destroyed the crop in Brazil and the civil wars in Ethiopia, reducing supplies in the world market.

Nairobi Coffee Exchange (NCE) said the earnings jumped 117.3 percent from $23 million (Sh2.6 billion) in the corresponding month a year earlier, buoyed by the challenges suffered by the two leading producers.

Brazil, which is the top world supplier, produces up to 60 million kilos of the beverage every year but the harsh weather conditions saw the Latin American nation lose up to 20 percent of its entire crop this season.

This created a shortage in the world market while farming activities in Ethiopia, which is the fifth top producer globally, were also interrupted by the conflict between the government and the militia in the Tigray region.

“Brazil has been facing record crop failures due to cold weather and drought … and Ethiopia was on the verge of a civil war,” said NCE chief executive Daniel Mbithi.

“At the same time, all around the globe, the coffee industry, like many others, is facing difficulties due to labour shortages brought about by the Covid-19 pandemic, which led to global shipping crisis. It is predicted that this trend may continue in the one or two years.”

The average price of the commodity in the review period increased from $269 (Sh30,500) to $341 (Sh38,600) for a 50-kg bag on a month-to-month comparison.

Auction records also show that the sharp increase in prices was a result of high international cost in the benchmark New York Price which posted a 10-year record on the back of unfavourable weather in some parts of the world, which impacted negatively on production.

Favourable weather conditions in Kenya, however, saw a marked increase on the volume of coffee offered through the auction which went up 70.5 percent in December 2021 when compared with the same period the year before.

The Central Bank of Kenya had last year forecast a rise in the price of local coffee in the international market following cases of frost in Brazil.

CBK governor Patrick Njoroge had said Kenya could benefit from the bad weather in South America, which would impact negatively on the production of the top producers.

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