Kenya’s Coffee Comeback

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The substance known as ‘Black Gold’ has regained its lustre, as international coffee prices soar. Daniel Allen recently visited the East African country, filled his mug and had a taste of what the fuss is all about.

At the Jungle Coffee Estate, in the shadow of central Kenya’s Aberdare Range, sacks of freshly picked coffee cherries are ready for processing. Estate manager Josephine Macharia watches carefully as fast flowing water and whirring machinery sorts, pulps and grades the latest crimson harvest. Left to dry on tables for a week, beans are then bagged and shipped to the nearest mill. Macharia knows that this year’s crop is likely to fetch a bumper price.

Off the back of a buoyant international market, Kenya’s coffee industry is now reaping record rewards. According to Nairobi Coffee Exchange figures, Kenyan coffee sold through auction earned nearly US$222 million for the period 2010/11, up nearly 30% on 2009/10. Coffee sold during 2010/11 went for an average price of US$329 per 50 kilogram bag, up from US$236 for the previous season. An all-time high of US$1,022 per bag was reached for some of the country’s premium grade AA beans.

World coffee prices have been rising sharply since 2010, driven upwards by growing demand and poor harvests. According to the International Coffee Organization, global coffee demand for 2011/12 will be around 135 million (60 kg) bags, while total coffee production for the same period is currently pegged at around 131 million bags. Much of the growth in demand for coffee comes from countries with rapidly developing economies, such as China, India and Brazil. “China’s demand for coffee is now rising by around 20% a year,” says Dr. Elijah Gichuru, Deputy Director of Kenya’s Coffee Research Foundation (CRF). “Globally, the average annual growth rate is only 2%. Brazilians are also drinking more of their own product. By next year the country will probably be consuming more coffee than the United States.”

The Arabica that grows in Kenya’s rich volcanic soils is some of the finest in the world, highly valued as a mild acidic coffee used by international roasters to enhance run-of-the-mill blends. The country’s coffee industry, which employs an estimated six million Kenyans, is noted for its co-operative system of milling, marketing and auctioning coffee, and for the high percentage of beans produced by smallholders.

For three-quarters of the past century, coffee in Kenya was the cornerstone of its agricultural economy. Following  a coffee boom in the 1970s and early 80s, however, the Kenyan coffee industry entered a long period of decline, as coffee prices plummeted, fertiliser costs rose, and erratic weather patterns and the deeply destructive coffee berry disease (CBD) impacted yields. Across the landscape, thousands of coffee bushes were grubbed up to make way for bananas or fields for dairy herds.

Buoyed by recent high prices, the Kenyan coffee industry is finally starting to make a comeback. A new generation of young coffee farmers is participating in the resurgence, with non-traditional growing areas such as the Rift Valley coming under cultivation and neglected smallholdings restored to their former glory. The CRF supplied more than two million new Arabica coffee seedlings to Kenyan farmers for planting earlier this year.

Despite the optimism, the Kenyan coffee industry still faces numerous challenges. Kenyan climate, geography and soil may help it to produce some of the world’s best coffee, but sub-optimal farming and processing practices often limit the quality and quantity of coffee that smallholders produce. Poor market links hamper their ability to sell it.

“Many coffee buyers say the biggest stimulus for coffee growers is price, but that’s only part of the story,” says Jeremy Hulme, Managing Director of Tropical Farm Management Kenya, which helps coffee famers manage estates and market their beans.

“Production levels are still a major issue. At its peak in the 1980s, Kenya produced 130,000 tonnes of coffee – this year it will be less than 40,000 tonnes. There are a number of reasons for this, of which poor productivity is one. In Kenya, the average yield is less than two kilograms of cherries per tree. With the right application of resources and expertise this could be as high as 10 kilograms. Brazil, which produces way over two million tonnes of coffee, has three to four times the yield per hectare than Kenya.”

With Kenya’s government now targeting annual coffee production of 100,000 tonnes, the CRF is playing its part in boosting productivity. Headquartered in Ruiru, just outside Nairobi, the foundation has recently released a new coffee variety known as “Batian”. Batian can yield up to five tonnes per hectare by its fourth year, and matures more quickly, meaning harvesting can begin after just two years.

“Batian is also very resistant to CBD,” explains Dr. Elijah Gichuru. “In recent years, heavy rains have encouraged fungal diseases that have ravaged crops. Farmers using Batian have reduced production costs, because they can spend less on fungicides and the labour required to control disease. Less fungicides is also better for the environment.

“Batian also boasts good bean and cup quality, and is well suited to all Kenya’s coffee-growing areas,” continues Gichuru. “We did introduce a disease-resistant hybrid back in 1985 called Ruiru 11, but many people said it lacked aroma. We have high hopes for Batian.”

Kenya’s complex system of coffee smallholders and co-operatives also needs overhauling. While small-scale farmers often produce better coffee than Kenya’s estates, there are wild inconsistencies in quality. Smallholders are far more susceptible to price fluctuations than large-scale enterprises, and are often the victims of corrupt practice by co-operatives. To counter this, new regulations mean that co-operatives can keep only 20% of net sales and must pass on the rest to farmers.

Supplying credit to Kenyan coffee smallholders is also critical, especially when appreciable returns on new coffee crops may not be seen for at least several years. According to experts, attaining optimum coffee production in Kenya may require immediate loans of at least US$100 million.

“Kenya’s Coffee Development Fund is helping, but credit coverage is still way below what’s needed,” says Benard Sitati, Head of Operations at Thika Coffee Mills, whose Increased Production and Improved Quality (IPIQ) Program provides smallholders with low-cost loans to set up production.

Those Kenyan coffee farmers who are already engaged in production are well aware of the fickle nature of the market, but they are still happy to make hay while the sun shines. “At the moment I can make a good living from coffee,” says John Wambugu, a coffee farmer with a smallholding located close to Mount Kenya. “Of course if the price gets too high, buyers may purchase beans from Ethiopia or Uganda. We have to keep buyers hooked by ensuring our quality is second to none, all of the time.”

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