Despite coffee being one of Kenya’s largest exports since its introduction in the country over a century ago the sector has been undergoing a slump since 2020.
The 2021 Economic Survey shows that the sector dipped by about 18 per cent on lower crop yields, mainly due to the harsh effects of the coronavirus pandemic. Coffee output was 36,000 tonnes in the 2020, a decline from 45,000 tonnes the previous year.
Production by co-operatives decreased by 16.2 per cent and estates by 22.5 per cent. Export prices of unroasted coffee rose from Sh416.70 per kilogramme in 2019 to Sh512.40 in 2020.
Opportunities to improve the lot of small and medium scale coffee farmers lie in:
- Better governance structures for cooperatives, millers and Coffee Board of Kenya
- Institutional reforms to increase farmers’ participation in all stages of value chain
- Incentives to encourage networks and alliances formation among coffee farmers
- Coffee branding, particularly through single-origin identification i.e., the Geographical Indication (GI) of coffee, which offers opportunities for contract farming and joint ventures.
Boosting the Value Chain
Many reforms in the coffee industry have been initiated. In February 2022, the Government launched the National Coffee Farm Inputs Stimulus Package E-Subsidy Programme to boost access to farm inputs by small and medium scale coffee farmers.
The programme targets 82,650 farmers in the 32 coffee growing counties and is being implemented by the New Kenya Planters Cooperative Union (New KPCU).
Through the programme, coffee farmers will access a wide range of inputs of their choice at an affordable price. To eliminate corruption in the process, the Government has embraced technology by issuing small and medium scale farmers with smart cards through New KPCU. This has made it better, faster and reliable. Farmers use the cards to buy fertilizers or pesticides from accredited suppliers.
The programme allows farmers to get loans at reasonable interest rates to be repaid in the shortest time possible.
The Youth Enterprise Development Fund (YEDF), one of the flagship projects of Kenya Vision 2030, under the social pillar is also enabling Kenyan youths to venture into coffee farming.
An example is Sailo Youth Group in Kipkelion East, Kericho County who used a Kshs 200,000 loan from the Youth Enterprise Development Fund to begin coffee farming and are now reaping the benefits. Kericho County is predominantly a tea-growing zone, but areas of Kipkelion East Sub-County which is on the south-western part of the county, are known for coffee farming, thanks to its black cotton soil.
Sailo Youth Group has since bought more land for their coffee plantation and members are using income from coffee to sustain their families.
The group owns four acres of land of which three acres are under coffee. In 2020 they earned over Kshs 800,00 from 9,800 kilogrammes of coffee berries.
The Kipkelion East landscape is dominated by three popular varieties of coffee including Ruiru 11, Batian, and K7. Ruiru 11 can resist Coffee Berry Disease and Coffee Leaf Rust and is suitable for all growing altitudes in Kenya. The Agribiz loan from the Youth Enterprise Fund targets youth who wish to start or expand agricultural-related businesses, including the purchase of equipment and working capital and is available to individuals, registered groups, partnerships and companies. They can access up to Kshs 2 million to be repaid within a period of three years.
In April 2020, the Government of Ken- ya (GOK) announced a US$14 million coffee revitalisation programme, with most of these funds allocated to improving coffee processing and the rest dedicated to input use and support for cooperatives.
300m: Amount disbursed through the new KPCU to farmers out of the Ksh3 Billion Coffee Cherry Advance Revolving Fund
The impact of this program will likely not be observed until after 2022. Coffee is projected to register a 7 per cent rise in production in 2022.
The Ministry of Agriculture has introduced the Coffee Bill 2021 currently undergoing public participation by the National Assembly.
So far, the Government has legislated on the Coffee General Regulations and Coffee Cherry Revolving Fund Regulation and also forwarded the Coffee Bill, 2021 to Parliament for deliberation and approval.
US$14m: Value of coffee revitalisation programme announced by the Government of Kenya in 2020, with most of these funds allocated to improving coffee processing
Through the New KPCU, over 300 million has been disbursed to farmers out of the Ksh3 Billion Coffee Cherry Advance Revolving Fund. The Government prefers the revolving fund with an affordable interest rate of 3 per cent for farmers to buy inputs and other essentials compared to more ex- pensive alternatives.
The Agriculture Ministry is also undertaking a performance audit of 300 coffee co-operative societies and sup- porting the digitisation and modernisation of factories’ infrastructure.
The Ministry wants to create an agricultural commodities regulator to oversee the trading of all agricultural commodities under the watch of AFA. Government is also facilitating the adoption of digital agritech tools that among other things relay to farmers in real-time how much their coffee fetched on the market via an SMS (short message service) platform launched by the Ministry of Agriculture in 2018.
Precision Agriculture for Development in collaboration with Safaricom developed the platform which also helps farmers access information on choice of chemicals, fertilisers and other inputs. Technology is also helping to reduce wastage occasioned by processing and milling.
Once the Coffee Bill 2021 becomes law, marketing agents doubling up as buyers will be banned and coffee growers will be given more agencies in the processing, trading, sale and payments for their coffee.
Kenya produces quality Arabica beans which are generally recognized and upgraded with other relatively lower brands hence the need for value addition. The coffee sub-sector has ad- opted better packaging to extend the useful life of roasted coffee and plans are underway for large-scale roasting in importing countries using vacuum packing as a preservation technique.
Once the Coffee Bill 2021 becomes law, marketing agents doubling up as buyers will be banned and coffee growers will be given more agencies in the processing, trading, sale and payments for their coffee
The share of gross value added as percentage of retail price of roasted coffee in most importing countries is over 70 per cent. As a country, Kenya can substantially gain from her coffee exports by roasting it within the country.
The Trade, Industrialisation and Enterprise Development Ministry is working with the Ministry of Agricutlure to encourage coffee co-operatives to lease facilities put up by the private sector and the government at Export Processing Zones (EPZ) to add value to their produce, like the Africa Coffee Roasters (ACR) factory in Athi River EPZ on Thursday. By roasting and packing locally farmers can gain more from their coffee exports.
The Coffee Research Institute (CRI) has created a variety known as Batian that is immune to rust leaf and coffee berry disease and a rapid maturation period of two years. Value-adding operations during production include soil preparation, fertilisation, spraying, maintenance and harvesting.
At the farm level, the CRI and private sector traders offer producers complementary services and pertinent inputs. Kenyan coffee is ranked among the best in the world and 99 per cent is exported mainly to Germany, Sweden and Belgium, the USA and Saudi Arabia.