While demand for Kenya Coffee in the World remains steady, its production is uncertain. This is according to Global Agricultural Information Network (GAIN) Report.
An assessment by the US Department of Agriculture Foreign Agriculture Service, which contributed to this GAIN Report, forecasts a significant drop in Kenya’s coffee production in the marketing year 2019/2020 due to low prices and the persistent shift of coffee producers to less risky enterprises.
Meanwhile, Government of Kenya (GOK) coffee sector reforms are falling short, says the bulletin
The report mentions that Government of Kenya efforts to promote smallholder coffee production in non-traditional growing areas is also countered by a surge in housing developments on farms located in peri-urban areas, leading to an overall stagnation of total coffee production.
It observes that success of the “cash-on-delivery model” that was piloted in 2017/2018 in selected coffee marketing co-operatives is already in doubt, with industry sources attributing its lack of smooth take-off to low farm productivity and also fragmented co-operative units.
The size of coffee farms continues to decrease due to inheritance driven sub-division. On the other hand, Kenya has more than 500 coffee marketing co-operatives, all geared to marketing fewer than 900,000 bags of coffee annually.
Moreover, Kenya has two distinct harvest seasons in a year (September-December and March –July), each of which peaks for less than two months.
According to Kenya’s coffee directorate, 20% of coffee mills are currently operating at their lowest levels.
Despite elaborate plans, Kenya is yet to fully liberalize the coffee sector to let the private sector fully undertake critical marketing roles and assume associated risks.
Both the existing policy and legal frameworks place immense risks on the producer, even in instances where farmers are unable to bear these risks.
Kenya produces mild coffees with primary processing occurring at either the communally/co-operative owned mills that aggregate coffee from small-scale farmers or at farmer-owned mills in large-scale plantations.
Co-operatives or individual licensed farmers may sell their coffee directly to international buyers, so long as the direct sale contracts have been registered and approved by the Coffee Directorate of Kenya’s Agriculture and Food Authority (AFA).
The report suggests that alternatively, farmers can contract and authorize their marketing agents to sell through the Nairobi Coffee Exchange (NCE), a spot market that has operated since the early 1930s.
The incidence of risks at virtually all stages of marketing are borne by the farmer, because under Kenya’s coffee sector rules a batch of coffee belongs to a farmer up to and until an exporter buys it.
A Kenyan coffee farmer, therefore, not only bears production risks, but also post-farm risks such as quality deterioration, pilferage and theft, and exchange rate volatility.
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