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December 17, 2018

Coffee prices increase by 24%, volume falls by 6% due to drought — exchange

A worker sorts coffee berries at a factory in Kienjege, Kirinyaga county, on July 24, 2014 /REUTERS/THOMAS MUKOYA
A worker sorts coffee berries at a factory in Kienjege, Kirinyaga county, on July 24, 2014 /REUTERS/THOMAS MUKOYA

Coffee prices have increased by 24.52 per cent this year, despite a six per cent drop in volume due to drought, the Nairobi Coffee Exchange says.

A report released on Friday by the exchange shows  a 50kg bag of coffee increased from Sh18,956 last year to Sh23,604  by the end of last month.

NCE chief executive Daniel Mbithi said the volumes traded declined from 31,370 metric tonnes in 2016 to 29,309 metric tonnes in 2017 — a 6.57 per cent decrease.

“This can be explained by the lower crop realised due to adverse weather conditions, mainly in the main growing regions of Mt Kenya. However, better prices were realised as traders competed for the little volumes available,” he said.

Mbithi said Kenyan coffee is highly sought after in the international market, despite a decrease in annual output.

Kenya is known globally for producing  fine Arabica coffee that fetches premium prices, locally and internationally. It is used for blending other coffee.

There is a huge market in the US and other countries around the world. The government plans to increase coffee exports to the US to more than 25 per cent from the current less than 10 per cent, Agriculture and Food Authority interim director general Alfred Busolo said. The auction report at the end of last month showed a 50kg bag of grade AA, the country’s topmost premium quality coffee, sold for Sh40,354 in February.

The average lowest price achieved per month for all the grades reached Sh13,391, compared to the average highest attained of  Sh29,249 in February this year, the report said.

Mbithi said during the review period, the number of bags of coffee bought at auction decreased to 479,373 bags at end of last month. 

This is down from 514,321 bags offered for sale in the same period last year — representing a 6.79 per cent decrease.

According to the Economic Survey 2017, the price of a kilo of unroasted coffee increased by almost 30 per cent at the international market for the last four years to reach Sh472 in 2016.

 This compares to Sh334 earned in 2013.

Total coffee earnings increased to Sh21.3 billion in 2016 from Sh20.5 billion in 2015, a 3.9 per cent increase, the report said.

The area under cultivation decreased to 110,000 hectares in 2010, from 170,000 hectares “due to the increased conversion of coffee bushes into real estate, especially in Kiambu and Murang’a counties,” it said

In other regions, coffee farmers have been uprooting the crop and replacing it with high-value crops, mainly horticulture, citing poor returns.

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