32 percent coffee price fall on global glut signals lower earnings

Kenya’s coffee has shed 32 percent of its value since January as international prices remain low, pointing to a decline in earnings for farmers this season.

A market report from the Nairobi Coffee Exchange (NCE) indicates the price of a 50-kilogramme bag has dropped to a low of Sh13,300 from a high of Sh19,500 in January, marking the lowest value to have been realised since the beginning of the year.

The price has been dipping in the last couple of sales despite good volumes and high quality beans offered for sale at the auction.

In this week’s trading Kenya’s premium coffee grade AA recorded much lower price at Sh16,000 down from Sh18,000 that was realised last week for a 50-kilogramme bag.

Export market

Head of Coffee Directorate Isabella Ngonge said on Wednesday attributed the price downturn to Kenya’s overreliance on the export market.

“If we had increased the local share of our consumption, then this would have helped in cushioning us against the price volatility,” said Ms Ngonge.

The NCE had last month said the good prices were expected to hold up to this month as the main crop from central Kenya continues to trickle into the market.

The price of coffee in the world market has been on a decline since last November when it hit a low of 113 cents a pound (of weight) before sliding further last week to 98 cents per pound.

Earnings from coffee dropped 13 percent in the four months to January compared to the same period last year, on account of low prices for Arabica at the world market.

Data from the Coffee Directorate show farmers earned $41 million (Sh4 billion) in four months to January against $47.7 million (Sh4.77 billion) last year.