Register now for Fin24 Dashboard and get access to portfolios, watchlists, financial comparison tools, and a whole lot more to help you achieve your financial goals.

Data provided by McGregor BFA
All data is delayed
Loading...
Where am I? Home
 
Prices are delayed by 15min.
Join the Fin24.com conversation about JSE-listed stock by using every time you tweet.

Kenya coffee eyes new golden era

Mar 06 2011 12:57 AFP

Related Articles

Cocoa price hits new high

Cocoa soars on Ivorian ban confusion

Cocoa market rocked by Ivory Coast ban

Starbucks sees higher 2011 coffee costs

Share price jump for India's Tata Coffee

Starbucks headed for SA

 

Top Stories

Cell C move sparks price war

May 27 2012 11:21

There's a price war raging between South Africa's cellphone networks after Cell C lowered the rates of its prepaid calls by more than 34%.

MyCiti buses running at a loss

May 28 2012 07:53

The City of Cape Town has spent R175m running the Myciti bus service since the Soccer World Cup compared to an income of R35m, a report says.

Another golf estate victim

May 27 2012 13:09

The oversupply of golf estates has claimed another victim.

 
Share Share line Print

Nairobi - Kenyan coffee producers are hoping that soaring global prices will end years of neglect, that saw output drop fourfold, and herald a new golden age for what was once the country's top export.

The arabica that grows in the volcanic soils of Kenya's highlands is sought worldwide as a high quality bean used in the blends that fill the cups of the ever-growing global army of espresso connoisseurs.

Yet production has dwindled steadily in recent years to hit 36 000 tonnes last year, down from 130 000 tonnes in 1997.

Coffee is the most traded commodity in the world after oil but Kenyan growers are also among the poorest and many of those who enjoyed the coffee heyday of the seventies have since uprooted their trees and diversified.

Most of Kenya's remaining bushes are centennial and the farmers not much younger.

"The average age of a Kenyan farmer is about 55 years and I think I'm being conservative. So without somebody to carry the mantle... the sector is under threat," said Lucy Kimani, head of the Kenya Coffee Producers' Association.

At Nairobi's coffee exchange, just under veteran President Mwai Kibaki's portrait, hangs a ceramic sign for Mincing Lane - once a hub for tea and coffee trade in London - that was donated in 1951.

The pre-colonial auction room - with panelled walls, faded lime green seats and writing tables sporting large built-in tin ashtrays - reeks of long-gone glory days.

But lately, the numbers flashing in red on the digital trade screen have gone wild, with lots of Kenya's benchmark AA grade fetching a record $1 022 last month, more than double the highest prices achieved last year.

"Right now what's trading in front of you is at $6 a kilo," said Jay Sondhi, one of the buyers in the auction room cranking the prices by keeping their finger down on their bidding button.

"Over the past weeks we've had coffee trading at $10 to $12 a kilo... and that represents a 100% increase in some of the top qualities... That's huge," said the managing director of Sondhi Trading Limited.

Prices have reached 40-year highs because global demand - spurred notably by the spread of cafe culture to emerging powers such as India - keeps growing while stocks are at an historical low.

Top world producer Brazil is heading into the off year of its biennial crop cycle while bad climate in Colombia, the fourth producer behind Vietnam and Indonesia, has resulted in poor harvests for three consecutive years.

But John Logan, Kenya Coffee Initiative Director at Technoserve, a non-profit body that helps people in the developing world build businesses, warned that much more was needed to rejuvenate the industry than just high prices.

Kenya's estimated 600 000 coffee farmers work through cooperatives but trust needs to be rebuilt after years of bad governance that drove small scale holders away from the crop.

"A coffee buyer will tell you that the best fertiliser for coffee is price, it's true but it's not only that... It's how much the farmer really gets that counts," said Logan.

While prices are expected to remain bullish for some time, prices will fall again.

The growers' trust in their cooperatives needs to be rebuilt and production needs to increase, Logan said.

"The average coffee farmer in Kenya produces less than two kilos of cherries per tree when he could be producing 10 kilos" with the right inputs, he said. "Farmers will need higher yields, there's no spare land."

John Waweru has a small plot near Thika, an hour's drive from Nairobi, and has been farming coffee all his life, just like his father before him.

"In latter years the coffee prices were very low but of late it has increased so it is now bringing in an income for us, helping us educate our children as well as maintaining our family," he said.

He said younger farmers were being drawn back to old neglected bushes.

The cooperative he brings his coffee to has seen its membership increase significantly in recent weeks and Daniel Mbithi, the head of the Kenyan Coffee Producers and Traders Association, said he expects "more and more young people to go back to their farms."

"I can't be sure we're going to see another heyday but there's a lot of enthusiasm," Mbithi said.

Coffee is considered a rich man's drink in Kenya, where a lot of farmers could scarcely afford anything other than tea for their own consumption.

"If prices stay like this, I hope coffee farmers will become coffee drinkers," said Waweru.

 
 
Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
It pays to know the cost and what you’re getting in return
May 28 2012 09:33

Investors may not have a clue what they’re paying their money managers or they type of service they’re getting, or, whether they can actually negotiate lower fees. (Reuters)

Sasha

"In the short term this is true, Greece will dominate the headlines on a day to day basis, until their next elections when there would be some clarity to answer the question, "What next for Greece?" Amazingly everyone except the politicians seem to be lining themselves up for worst case scenario, b... Read their blog...

Recently updated
Podcasts
The Sishen saga

Legal expert Peter Leon on the increasingly complex legal wrangle over the Sishen Iron Ore mine. Time: 8:17 Listen Here...

Before you list

Is the clarion call of the JSE calling? Listen to Fin24’s expert panel discussion before you list your small business. Time: 17:29

Compare and Buy

Compare and apply for hundreds of financial products from many suppliers.

Credit cards Medical aid Current accounts Think Money

Money Clinic

Money Clinic Do you have a question about your finances? We'll get an expert opinion.
Click here...

Loading...