CoffeeNetwork (New York) – According to the latest USDA Attache report, Kenya’s coffee production for crop year 2019-2020 is pegged at 650,000 bags, a decline due to effects of a crystalizing drought, and the scale-down of crop husbandry by farmers due to low returns. The sector is also losing competitiveness due to other factors such as: increasing cost of labor and inputs; high incidences of pests and diseases; and poor governance of marketing cooperatives. Indeed, when opportunity presents, farmers are moving to less risky enterprises.
In the meantime, GOK efforts to promote smallholder coffee production in non-traditional growing areas is countered by a surge in housing developments on farms located in peri-urban areas, leading to an overall stagnation of total coffee production. Viability of “cash on delivery” model in doubt.
The success of the “cash-on-delivery model” that was piloted in MY 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 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 percent of coffee mills are currently operating at their lowest levels. Marketing system places huge risks on farmers Despite the continued, 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 risk.
FAS/Nairobi forecasts ending stocks to drop to a record low in MY 2019/2020, attributed mainly to the lower production. GOK holds no coffee stocks, rather coffee stocks are held by the millers, marketing agents, and exporters. Individual large-scale farmers and co-operatives also hold stocks in the form of parchment coffee.
« Back to index