Coffee trade at the weekly auction recorded a strong performance this week, as the value of volumes sold hit a new high of $9 million (Sh1.3 billion).
This comes as the latest government-led reforms in the sector enter their second year, with good prices signalling better earnings for farmers this year compared to previous years.
Nairobi Coffee Exchange data shows the weekly trade recorded an increase in the volumes traded, which jumped 35 per cent to 30,272 bags compared to last week, with a value of Sh1.3 billion.
This was a 35 per cent rise compared to the $6.68 million (Sh976.9 million) traded last week.
“This week’s coffee auction held on Tuesday 27 Feb recorded a significant rise in trading activity, with both volumes and value traded posting significant gains,” NCE said on Thursday.
The highest price achieved was $499 (Sh72, 978) per 50kg bag, with beans from Nyeri region (Ndaro-ini Coffee Society) posting the top price.
This is equivalent to Sh224 per kilogram of cherry at the factory gate, as farmers gain from reforms among them direct dealing at the auction through representatives.
The average price also increased by 19 per cent to $290 (Sh42,412) from the previous $244 (Sh35,685) per 50kg bag. This average price is equivalent to Sh130 per kilo of cherry.
The top 10 prices went to coffee societies in Nyeri and Kirinyaga counties namely: Ndaro-ini, Kangocho, Mutheka and Gathaithi from Nyeri and Kii, Karimikui, Mugaya, Kiangoi all part of Rung’eto Farmers’ Cooperative Society and Kaguyu from Inoi Farmers’ Cooperative Society, in Kirinyaga.
A total of 24 buyers participated in the auction with the top five buyers, led by C.Dormans purchasing 75 per cent of the coffee presented.
Others included Ibero Kenya, Kenyacof, Louis Drefus Company and Taylor Winch.
This year has seen a sustained rise in coffee prices with the number of bags receiving more than $400 (Sh58,500) per unit increasing.
Notably, 20,716 bags, or 68 per cent of the volumes traded, were premium grades AA and AB.
The sustained rise in prices may be a resounding vindication of the coffee sub-sector reforms that the government has been pushing since way back in 2016, when a 19-member Coffee Sector Reform Taskforce, led by Professor Joseph Kieyah, was appointed.
After President William Ruto took over office, he appointed his Deputy Rigathi Gachagua to spearhead reforms in the country’s coffee and tea sectors, in a renewed effort by the government to ensure farmers benefit from their crops, and the country increases its offering to the global markets.
Among reforms, which started last year, including having dealers purchase coffee through the NCE auction, as the government moved to revoke licenses of ‘cartels' that had infiltrated the sector.
"Dignity of farmers who toil in their farms only to reap peanuts from their produce will be returned and coffee made the black gold that it was for years," Gachagua had said, during the first national Coffee Reforms Conference, in Meru.
Co-operative Bank was appointed by the NCE to provide the Direct Settlement System (DSS) technology platform, on which coffee trading is now being conducted.
This is as provided for in the new coffee trading regime, supervised by the Capital Markets Authority.
“The clearing and settlement of trades through the Co-op Bank’s Direct Settlement System has ushered in unprecedented levels of price transparency, that has greatly rebuilt the trust that farmers have in the coffee auction and the Nairobi Coffee Exchange,” the regulator noted.
In this week’s trade, nine brokers or agents presented their clients' or farmers' coffee for trading at the auction.
Kirinyaga Slopes achieved the highest average price of $289, followed by Alliance Berries, KCCE Marketing Agency, New KPCU, Kiambu Coffee Marketing Limited, Kipkelion and Kinya coffee that traded coffees largely from Kisii region.
Coffee remains among Kenya’s key exports and foreign exchange-earners, with the sub-sector supporting an estimated five million Kenyans, both directly and indirectly.
The cash crop is produced under two farming systems; smallholder estimated at 700,000 growers and large, medium, and small estates estimated at 3,000 in number.
The smallholder producers are clustered into 559 active coffee cooperative societies to enjoy economies of scale.
