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Coffee earnings drop by Sh2.5bn in March as global glut persists

Nairobi Coffee Exchange
Nairobi Coffee Exchange chief executive officer Daniel Mbithi says high production of Arabica in Brazil, which is a leading producer in the world, had hit Kenyan coffee. FILE PHOTO | NMG 

Data from the Coffee Directorate indicates farmers earned Sh7.8 billion last month against Sh10.4 billion realised in the same period last year.

Nairobi Coffee Exchange chief executive officer Daniel Mbithi says high production of Arabica in Brazil, which is a leading producer in the world, had hit Kenyan coffee.

Mr Mbithi said this affected the average price at the auction with a 50 kilogramme bag dropping 21 percent to Sh19,300 from Sh24,600 previously.

“These results were occasioned by the Futures market at Intercontinental Exchange (ICE) in New York where it plummeted to a 13-year low of 91 US cents per pound,” said Mr Mbithi.

“Brazil, which is the largest producer of Arabica coffee (which Kenya produces), has had a bumper harvest producing over 10 million 60-kilo bags more,” he added.

Mr Mbithi says the high volumes were coupled by a weaker local currency to the US dollar leading to a surplus in the market and therefore suppressing prices.

“This led to global prices tumbling affecting all the coffee producing countries in almost equal measure. It is predicted that this may ease a bit on increased consumption levels of about 2.5 percent annually that will cut on surplus in the market,” the CEO said.

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

It has some of the best coffees in the world, highly sought-after by roasters for blending with low quality.

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

Nairobi 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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