President Uhuru Kenyatta has termed the direct export of coffee by smallholder farmers as remarkable sector reform that is earning them double dividends.
Speaking during the Madaraka Day celebrations in Nairobi, the head of state said his government has over the last three years eliminated the barriers created by the overly complex coffee industry structure that denied farmers their rightful share.
This is the second time in less than a week Uhuru is hailing reforms in the coffee sector that have seen six coffee unions licensed by the Capital Markets Authority as brokers.
Last week during the G25 African Coffee Summit, he cited a case where KipKelion District Cooperative Union earned double returns for being the first farmers-led broker to directly export coffee to South Korea.
“This is a historic achievement for small-scale coffee farmers across the country. Farmers from Kericho, Nandi and Bomet counties earned an average rate of Sh116 per kg of Cherry compared to an average of Sh76,” Uhuru said.
He added that those market gaps must be sealed to make farming cool.
Last week, the Union sent the second consignment of seven containers of approximately 134.4 metric tonnes to Good Bean Coffee Company, a South Korea-based coffee company.
The direct coffee export breakthrough is a result of Kenya’s participation and marketing initiatives during the Coffee Expo Seoul which took place in July 2021 where Kenya was a portrait country.
‘The deal inked by Good Beans Coffee Company in South Korea, will see Kenyan farmers earning close to $908,160 from the direct sale of 134.4 metric tonnes or the equivalent of seven coffee containers.
This will see about 9,582 coffee farmers receive an average of Sh100 per kilogram, almost three times that of the current auction price of Sh35.
Chairman of the Coffee Sub-Sector Reforms Implementations Standing Committee Joseph Kieyah said direct coffee export by farmers is a major milestone under Uhuru’s coffee sub-sector reforms.
The Capital Markets (Coffee Exchange) Regulations, 2020 allows coffee farmers to own brokerage firms to directly sell their harvest. Initially, farmers were forced to go through independent brokers.
The Coffee industry is the world’s 11th largest industry with an annual consumption of about 512 cups per capita and over 110, 000 coffee cafes.
“This is a lucrative industry that Kenyan farmers can take advantage of in terms of market diversification for coffee. Our focus now should be driven toward value addition,” Kenya Export Promotion and Branding Agency CEO Wilfred Marube said.
Currently, Belgium has toppled America as Kenya’s top export market for coffee with over Sh6.5 billion worth of coffee exported in the year to June 2021.
This was nearly double what it bought in the prior year, overtaking the United States as the top buyer of the beverage.
Besides South Korea, Europe and the United States of America, Kenyan Coffee has a market penetration capability in the African Continental Free Trade Area Agreement (AfCFTA).
Trade experts term AfCFTA the world’s biggest free trade area since the formation of the World Trade Organization (WTO).
It has a united 55-member state with a combined Gross Domestic Product (GDP) of not less than $3.4 trillion and a market of more than 1.2 billion people.
Other market prospects for Kenyan coffee include market linkages created during the Expo 2020 Dubai that aims at targeting the Gulf Cooperation Council.