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Commodities

Farmers hard-hit as coffee earnings plummet 23pc in April

Daniel Mbithi
Nairobi Coffee Exchange chief executive officer Daniel Mbithi. FILE PHOTO | NMG 

Kenya’s earnings from coffee dropped Sh2.8 billion or over 23 percent in April compared with corresponding period in 2018 as low international prices continue to hit farmers’ earnings.

Data by the Coffee Directorate indicates farmers earned Sh9.04 billion last month, against Sh11.8 billion realised in the same period last year.

Nairobi Coffee Exchange chief executive officer Daniel Mbithi says the month of April was among the worst at the auction as a result of lower international prices precipitated by high production of Arabica in Brazil, which is a leading producer in the world.

Mr Mbithi said this hit the average price at the auction with a 50-kilogramme bag dropping by 24 percent to Sh17,400 from Sh23,300. “The month of April was among the most difficult in trading in terms of prices globally and here in Kenya in particular. It is the month we witnessed ICE in New York get below 90 cents per pound mark,” said Mr Mbithi.

“Brazil, which is the largest producer of Arabica coffee (which Kenya grows, has had a bumper harvest, producing over 10 million 60-kilo bags more,” he added. Mr Mbithi says the high volumes, coupled with a weaker local currency to the US dollar led to a surplus in the market and therefore suppressing the prices.

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Price volatility

Kenya exports about 95 per cent of the coffee produced locally to the international market making it vulnerable to price volatility.

The country has one of the best coffees in the world. It is highly sought-after by roasters for blending with low quality beans from other regions.

But Kenya’s production has significantly dropped compared with regional peers like Uganda, which was at par with the country in the previous years, now widening the gap.

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

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