By George Munene
The average coffee price for a 60-kilogram bag of coffee has grown by 83 per cent from Sh 21,395 in 2019 to Sh39,093 in 2021.
“This clearly shows that the coffee boom is coming back, with the new reforms within the sub-sector we are promising better prices that will be sustained and are urging farmers who had dropped coffee farming to take it back up,” said Agriculture CS Peter Munya.
This has been reflected in farmers’ earnings with several societies paying out over Sh100 per kilogram of cherry in the coffee year 2020-2021. The national coffee payment average has risen by 78 per cent from Sh45 per kilogram in 2016-2017 to Sh80 in 2020-2021.
According to the agriculture ministry head, there is little risk of declining prices as Kenya reestablishes itself in the world market and its reputation internationally grows.
He was speaking during the launch of the Coffee Stabilisation Framework Report which seeks to identify interventions and risk mitigation measures that will ensure smallholder farmers have stable incomes.
It highlighted inadequate coffee extension services, high costs of production, and poor quality planning materials as the major contributors to volatile and unfavorable coffee prices.
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The report was authored by a technical team constituted in August 2021 by the agriculture cabinet secretary and forms part of a wider reform process of the coffee sector initiated by the government in 2016.
At just 36.9 tonnes in the growing period 2019-2020, Kenya currently produces less coffee than it did pre-independence in 1963 when it was the country’s leading foreign exchange earner.
However, ongoing reforms within the coffee industry are already bearing fruit with coffee industry export earnings improving by 33 percent, from Sh18.73 billion in 2013-2014 to Sh27.7 billion in 2020 to 2021.
To turn around the coffee sub-sector, the Kenyan government has instituted reforms such as setting up the Sh2.7 billion Cherry Revolving Fund which disburses a loan that is 40 per cent of the worth of the cherry you deliver at just three per cent interest rate. This has helped improve liquidity to farmers enabling them access basic commodities such farm inputs as they await payment on their delivered cherry.
The fund has thus far benefited 15,703 farmers from 16 counties with continued sensitization hoping to reach even more farmers.
Establishment of the Sh1 billion input subsidy program has also helped over 59,000 registered farmers who pay 40 per cent less for farm inputs than the market price. This delivers the fertilisers, pesticides, at the factory level with the ministry urging more farmers to tap into the program individually or through their cooperative societies.
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The ministry was also quick to reassure farmers that the regulations within the coffee sub sector will not stop direct coffee exports. The government said it is actually cultivating more direct markets in Korea, Belgium and the US which earn farmers more on their cherry.
However, according to the agriculture cabinet secretary, the regulations will only allow the direct sale of coffee if the prices are higher or at least similar to the auction price.
This will help unearth the actual price of coffee globally, improving competition locally at the Nairobi Coffee Auction which cartels have often used to depress coffee prices.