Kenya coffee export revenues in 2009/2010 amounted to KES 16 Billion, according to statistics from the Coffee Board of Kenya, the industry’s regulator. In turn, coffee farmers earned as much as KES 140.00 a kilo, a return that has not been experienced in near past.
This is encouraging the farmers to up their production, while boosting the desire by farmers who had abandoned the sector as a result of poor returns to go back to coffee growing.
According to Dr. Romano M. Kiome, CBS, the Permanent Secretary in the Kenya’s Ministry of Agriculture, the full recovery of the Coffee Industry to its annual potential of 100,000 Metric tonnes would contribute an additional 1-2 percentage points to the growth of the economy, contributing to 6.5% of growth of the National GDP in 2011.
The multiplier effect of the related economic activity would further fuel economic growth and contribute towards Vision 2030, an economic blue print aimed at transforming Kenya into a middle income country by the year 2030.
For few years now, the annual Kenyan coffee production has oscillated around an average of 50,000 Metric Tonnes. “We expect to increase our production to between 80,000 and 100,000 MT annually in the next three years,” said Dr. Kiom.
Although a small producer, at an average of 50,000 Metric Tonnes annually, Kenyan coffee is highly sought by roasters globally due to its high quality, thus increasing its value, hence demand.
During an event to mark the achievement of the Coffee Development Fund’s (a State corporation that finances coffee sector in Kenya) ISO 9001:2008 certification in Nairobi on June 10, 2011, Dr. Kiome, expressed confidence that it is possible to ride on the current farmers’ buoyancy on coffee farming and surpass the optimum of coffee production experienced in 1980s, when coffee was the country’s top export earner.
“Given the fact that coffee price in the International market is high, and the trend for such improved pricing is expected to continue for a considerable time in future, I am confident that this target is achievable,” he said.
In order to achieve this desired target, the stakeholders in Kenyan coffee sector are focusing on sector reforms that would address the welfare of the farmer at the grass root.
According to Mr. George O. Ooko, the Managing Trustee, Coffee development Fund, it is imperative to address various challenges that face coffee farmers such as cherry hawking and theft to prevent mass exodus from coffee farming in preference to other sectors; including real estate development.
Such reforms include efficient management in coffee industry, ensure that the bounty sum of net sale of coffee produce goes back to the farmer, while facilitating continued access to affordable credit facilities that unburden the coffee farmer financially, enabling him or her to access farm inputs easily, finance farm operations, coffee transport and processing as well as price stabilization.
The impact of the renewed farmer interest in coffee farming is being felt, if the request for funding for farm operations and inputs the Coffee Development Fund is receiving from farmers is anything to go by.
From some 3165 farmers that sought and were advanced KES 72.5 million worth loans in 2007, the number of farmers and amount advanced has steadily increased each year. By June 2011, Coffee Development Fund had served approximately 65,000 farmers with advances worth KES 1 billion.
This credit facility coverage is still way below the desired. There are about 650,000 smallholder coffee farmers who are members of cooperative societies and about 3800 small to large estate coffee growers, and not all these farmers have affordable access to affordable loans to finance their coffee farming.
According to Dr. Kiome, in order to meet the required optimum production, the coffee industry in Kenya needs financial support of KES 12 billion.
Mr Shadrack Mubea, the Commercial and Credit Manager at the Coffee Development Fund says that though there exists other few (commercial) financial entities in the coffee industry, the farmers have shied away from approaching these institutions due to stringent measures that are required in order to access a loan.
“Stringent demands especially on collateral security required to get a loan have burdened coffee farmers in the past. That is why CoDF is tailored to ‘unburden’ them with not only accessible, but affordable advances, where only social security is needed, where farmers come together to guarantee each other as the security for a loan.”
Mr. Mubea concedes that with new confidence in coffee farming, the desire for loans is even more than can be satisfied by the CoDF.
“Nevertheless, we are planning to reach out to those coffee farmers not yet served by CoDF,” says Mr. Mubea.
In addition, the fund has launched an internship programme, engaging some 37 interns send out to various coffee growing regions in Kenya to market CoDF credit facilities to coffee farmers in societies and estates.