Decline in global prices hit Kenya coffee earnings

A coffee roaster samples the beverage at the Nairobi Coffee Exchange. FILE PHOTO | NMG
A coffee roaster samples the beverage at the Nairobi Coffee Exchange. FILE PHOTO | NMG 

Kenya’s earnings from coffee dropped by Sh994 million in five months to February due to low prices at the international market.

Market data from the Nairobi Coffee Exchange (NCE) indicate the value of coffee dropped from Sh9 billion last year in February to Sh8 billion in the period under review, representing a 10-per cent decline.

Kenya’s coffee is majorly traded on the New York Coffee Exchange and any change in price affects the local sales.

“The low price was caused by the international prices that plummeted to the lowest in two years from as high of 150 cents per pound to current 120 cents per pound,” says Daniel Mbithi, chief executive officer of the NCE.

Mr Mbithi said the move affected the average price at the auction with a 50-kilogramme bag registering an average price of Sh25,149 from Sh27,068 previously, marking a seven per cent dip.

The volumes offered for sale also declined four per cent from 16.8 million kilos to 16.1 million kilos with the drop attributed to a delay by coffee from the main season in getting to the market towards the end of last year due to bad weather.

Coffee has been performing well since the beginning of the year, with prices going up since the first auction of 2017.

The rally saw the value of a 50-kilogramme bag of the produce hit Sh38,784 last month, making it the highest price that the auction has witnessed in the last one year. The prices have, however, started coming down with the latest sale held this week registering Sh25,755.

The value of Kenyan coffee dropped by Sh422 million in the year to December 2017 as the low-quality beans lowered the price of the beverage.
A report indicated that the value of the crop dropped to Sh2.2 billion last year from Sh2.6 billion in the previous year.

The country seeks to raise the amount of coffee roasted locally from five to 10 per cent annually over the next five years.

But even as Kenya seeks to expand both the local and international market, Productivity of coffee per bush has dropped from 10 kilogrammes in 1980s to two currently and the government is trying to lure farmers back into growing it.