Coffee earnings drop 24 percent as global prices falter

Coffee earnings dropped by 24 percent at the end of the 2018/2019 crop year that ended in September following a 13 percent slump in the price of the commodity in the international market.

A market report from the Nairobi Coffee Exchange (NCE) indicates that the crop earned Kenya $109.56 million (Sh11.4 billion) in the year, down from $145.22 million (Sh15.07 billion) that was realised in the same period in 2018.

NCE chief executive Daniel Mbithi said the low earnings resulted from a consistent trend of low prices at New York, where Kenya trades nearly all of its coffee.

“The earnings dropped on account of the dipping in prices at New York terminal, which declined by 13 percent to 96 US cents per pound as at August this year,” said Mr Mbithi.

Subsequently, the average price went down by 24.4 percent from Sh20,300 as at end of the previous crop season, to Sh15,300 for a 50-kilo bag in the period under review.

Coffee’s main crop season normally comes to an end in June with the new season starting in October with the onset of harvesting in eastern and western Kenya.

The volume sold during the review period was down to 581,357 of 60kg bags as compared with last year’s 582,887.

“By the end of 2018/2019, it is estimated that total production globally will hit 170 million bags (60kg bags) with consumption expected to grow by 2.1 percent to 165 million bags thus marking a surplus of about five million bags at the end of the year,” Mr Mbithi said.

The surplus implies that the prices will likely remain subdued for the rest of the year, which will further impact negatively the earnings of local farmers.

Kenya has some of the best coffee in the world that is highly sought by roasters for blending with lower quality bean from other regions.