Coffee Prices Soar, Kenyan Farmers May Find New Hope
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Kenyan Coffee Farmers Experience Market Recovery
Coffee is one of Kenya's main sources of foreign exchange income, with the crop accounting for approximately 6% of Kenya's total export revenue and 0.3% of the country's GDP.
After several years of decline, Kenyan coffee farmers may be seeing light at the end of the tunnel as global coffee prices reach new highs. In the global market, Kenyan coffee prices have soared to as high as $7 per kilogram, bringing back the glorious days that Kenyan coffee farmers once experienced.
At some point in 2019, Kenyan coffee prices in the global market fell to 189 Kenyan shillings (approximately $1.75), marking the lowest level in three years. Throughout that year, Kenyan coffee farmers could not achieve their desired income. Affected by reduced crop yields across the entire East African region, farmers' agricultural products did not sell for more than $4 per kilogram in the global market.
Many farmers therefore earned meager incomes and felt extremely frustrated. Some even resorted to uprooting coffee plants and switching to other crops with higher market prices to increase their income, such as avocados and macadamia nuts.
Joseph Mwangi, a farmer from Murang'a County in central Kenya, is one of those who uprooted coffee crops. He said: "I used to grow coffee on 3 acres of land, but I have already converted at least 1 acre to grow avocados because at least the market price of avocados is stable."
Mwangi's approach is similar to that of many other farmers who, due to their emotional attachment to the coffee crops planted by their ancestors, chose to retain a portion of their coffee plants.
Remarkable Recovery in 2020
Despite the global outbreak and spread of COVID-19 causing disruptions to global trade, 2020 became the best year for farmers as their income reached new highs with rising coffee prices.
Data from the Kenya National Bureau of Statistics shows that although Kenya's coffee exports decreased by 11% in 2020 to 43,483 metric tons, the value of coffee exports increased by 9.5% to $202.2 million.
Dozens of cooperatives across the country that help farmers export agricultural products have had a positive impact. For example, data from the Thiriku Cooperative in Nyeri County, central Kenya, shows that farmers' income in 2020 was $1.12 per kilogram, the highest level in nearly a decade.
Gerald Mwangi, manager of the Muguga Cooperative, also in Nyeri County, said that farmers earned an average of $0.93 per kilogram. The same is true for other cooperatives in the region, which is good news for many local coffee farmers.
Promising Outlook for 2021
As global coffee prices continue to soar, 2021 seems to be no different. According to KNBS data, despite the pandemic this year, Kenyan coffee prices in the global market in the first quarter ranged between $6 and $7, indicating that this year will be another good year for Kenyan coffee farmers.
In addition to rising global coffee prices, the Kenyan government's reforms to the industry and direct trade with foreign buyers have had a positive impact on farmers' income. Currently, some cooperatives are bypassing the Nairobi Coffee Exchange and exporting their products directly to buyers in the United States, Netherlands, and Denmark.
The Kenyan government has implemented regulatory reforms in the industry, introducing new legislation aimed at increasing farmers' income and enhancing the contribution of coffee crops to the economy. Additionally, the Kenyan government has established a 3 billion Kenyan shilling (approximately $30 million) fund from which coffee farmers can obtain loans to mitigate the impact of market fluctuations and disease disasters, and to increase production.
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