The coffee industry in Kenya is renowned for its cooperative system of milling, marketing, and auctioning coffee, and about 70% of Kenyan coffee is produced by small- scale holders.
Agriculture contributes 26 percent of the Gross Domestic Product (GDP) and another 27 percent of the GDP indirectly in Kenya, through linkages with other sectors, according to FAO estimate. The coffee industry has been one of the key pillars of Kenya’s economy since independence from Britain in 1963. However, already in the late 1970s and in 1986 mass coffee agriculture companies in Kenya have managed to temporarily help the country’s economy.
Kenya’s coffee sector rules a batch of coffee belongs to a farmer up to and until an exporter buys it. The coffee trade in Kenya has been a significant earner of foreign exchange in the economy and provider of employments. The sector is dominated by smallholder on less than.5ha. These smallholders are required by law to join cooperatives. Providing a livelihood for an estimated 800,000 small scale farmers who market their crop through the nearly 500 cooperative societies across the country.
The crop accounted for 4% of the marketed agricultural produce according to the Kenya National Bureau of Statistics Economic Survey 2017. Coffee is a key export earner, being the fifth foreign exchange earner after tourism, tea, horticulture and remittances from Kenyans in the Diaspora.
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Kenya coffee sector challenges
An average Kenyan coffee farmer, not only bears production risks, but also post-farm risks such as quality deterioration, pilferage and theft, and exchange rate volatility. The sector continues to face competition from housing developments and other enterprises in the traditional coffee growing areas.
According to Kenya’s coffee directorate, 20% of coffee mills are currently operating at their lowest levels. In spite of elaborate plans, Kenya is yet to fully liberalize the coffee sector to let the private sector fully undertake critical marketing roles and assume associated risks. Even with Kenya’s reputation for producing exceptionally high-quality Arabica coffees, the country’s coffee sector are facing stagnation in production amid political instability and cropland being lost to housing developments.
Government participations in the sector
Both the national and county governments in Kenya are promoting coffee planting with non-traditional coffee growing areas to ensure Kenya’s production is sustained.
Coffee Directorate established in 1933 and its role was regulated. The Coffee Marketing Directorate (CMB) established in 1946 and became fully operational in 1947 to cater for the coffee marketing activities. The CMB was abolished in 1971 and its functions consolidated with those of the Coffee Directorate Kenya (CBK).
Coffee volumes in Kenya are declining, and are currently around 45,000 MT per annum, or 0.5% of global production. The Nairobi Coffee Exchange is authorized to manage the coffee central auction in the country. In order to achieve its mandate as the manager of the trading floor as efficiently and to the benefit of the coffee industry, the Management Committee initiated this first ever strategic plan. Despite this, coffee production wasn’t the vital solutions to problems facing agriculture in Kenya.
As part of ensuring the best value for stakeholders in the coffee sector, the Nairobi Coffee Exchange has embarked on modernizing auction of the product. The 2017-2022 strategy for Kenya’s coffee sub-sector focuses on the revival, strengthening and adequate resourcing for more than 500 primary coffee cooperatives that receive, process, and market coffee, 99% of its Arabica, from nearly 700,000 smallholder farmers across 32 counties.
The Coffee industry is a very crucial sector of the Kenyan economy. The national government has announced recently, that it will establish a coffee research institution, as a measure to revive coffee farming and production in the country amidst dwindling fortunes.
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