Crisis in the Kenya Coffee Industry
CRISIS IN THE KENYA COFFEE INDUSTRY
INTRODUCTION
For many years, Kenya has been famous for its coffee. Described as strong in body and intense in flavor, Kenyan coffee, which belongs to the Arabica variety, is considered one of the world's most consistent sources of high-grade caffeine. And because of its good cash returns to local farmers, coffee has traditionally occupied a large share of the country's most productive lands, grown mostly on rich, red volcanic soil in areas with high and well distributed rainfall.
However, the story has changed in the past decade. Like other nations, Kenya's coffee sector, which used to be the country's prime foreign exchange earner, has been badly affected by plummeting world prices and now trails behind horticulture, tea and tourism in the local economy. With world prices falling by almost 70 percent since 1997, coffee farmers have complained they now get very little return for their hard work. Many now consider coffee to be a liability and, despite a law, which prohibits farmers from uprooting their coffee plants, the farmers are clearing their land for other crops.
Coffee production has plummeted from a peak 130,000 metric tons in 1988 to only 52,000 tons in 2002. A further deficit is being projected due to big players like Kakuzi bowing out of the coffee industry, and Socfinaf stumping over 50% of their crop.
This drop is largely attributed to lower productivity in the cooperative sector. The table below indicates the production from both estates and cooperatives. The increment in 2000 was stimulated by high prices in 1998, while drought in 2000 reduced output.
Year 1995/6 1996/7 1997/8 1998/9 1999/00 2000/1
Cooperatives 56,885 38,261 33,584 40,086 62,265 24,753
Estates 32,795 29,737 22,050 28,591 38,585 26,989
Total 89,680 67,998 55,634 68,677 100,850 51,742
Dealers are aware of the consumer market differentiation, more so the high potential for Kenya coffee as a specialty. Thus, they have
INTRODUCTION
For many years, Kenya has been famous for its coffee. Described as strong in body and intense in flavor, Kenyan coffee, which belongs to the Arabica variety, is considered one of the world's most consistent sources of high-grade caffeine. And because of its good cash returns to local farmers, coffee has traditionally occupied a large share of the country's most productive lands, grown mostly on rich, red volcanic soil in areas with high and well distributed rainfall.
However, the story has changed in the past decade. Like other nations, Kenya's coffee sector, which used to be the country's prime foreign exchange earner, has been badly affected by plummeting world prices and now trails behind horticulture, tea and tourism in the local economy. With world prices falling by almost 70 percent since 1997, coffee farmers have complained they now get very little return for their hard work. Many now consider coffee to be a liability and, despite a law, which prohibits farmers from uprooting their coffee plants, the farmers are clearing their land for other crops.
Coffee production has plummeted from a peak 130,000 metric tons in 1988 to only 52,000 tons in 2002. A further deficit is being projected due to big players like Kakuzi bowing out of the coffee industry, and Socfinaf stumping over 50% of their crop.
This drop is largely attributed to lower productivity in the cooperative sector. The table below indicates the production from both estates and cooperatives. The increment in 2000 was stimulated by high prices in 1998, while drought in 2000 reduced output.
Year 1995/6 1996/7 1997/8 1998/9 1999/00 2000/1
Cooperatives 56,885 38,261 33,584 40,086 62,265 24,753
Estates 32,795 29,737 22,050 28,591 38,585 26,989
Total 89,680 67,998 55,634 68,677 100,850 51,742
Dealers are aware of the consumer market differentiation, more so the high potential for Kenya coffee as a specialty. Thus, they have