Kenyan coffee sheds 1.7pc of value over low prices and poor quality

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

Kenyan coffee has shed 1.7 per cent of its value in eight months to April as a result of low prices at the New York exchange and poor quality.

Latest data from Nairobi Coffee Exchange (NCE) indicate the crop earned the country Sh12 billion between October and May this year compared to Sh14 billion fetched in the same period in 2014/15 crop season. 

“This drop is largely attributable to lower prices at the New York Coffee Exchange as the lower value led to decreased earnings,” said NCE chief executive Daniel Mbithi.

Mr Mbithi said the average price of a 50 kilogramme bag of coffee was lower by Sh2,000 a bag compared to the previous period. Kenya exports nearly 95 per cent of its coffee, making it vulnerable to low international prices.

The commodity normally trades at the New York Exchange, which sets global benchmark prices.

According to the Economic Survey launched last month, coffee production dropped by 16 per cent to 41,000 tonnes in 2015 compared to 49,500 tonnes in 2014.

Coffee started the season at the NCE at Sh15,655 per 50 kilogramme bag, rising to a peak of Sh24,038 for the same quantity in March. However, in the latest auction held this week the price dropped to Sh11,700.

The NCE, however, is hopeful of recovery both at home and globally, banking on the high quality coffee from eastern Kenya which will start trading at the auction next month.

Also, the impact of the El Nino rains has led to lower coffee harvests in Vietnam and Brazil, a situation expected to push up the price of the crop on low supply as the two countries are major world producers.

Brazil is the world’s biggest coffee producer, accounting for more than 33 per cent of the total production.

NCE will break for a 30 day recess this month as the main crop season in central Kenya comes to an end.

“We are breaking for recess this month as our main crop season comes to an end amid dwindling volumes and quality of coffee at the auction,” Mr Mbithi said.

He said that NSE was clearing stocks and staff would resume work after a month in time for eastern Kenya harvests.