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Coffee Prices Surge Amid High Demand

BY Jane Muia · July 4, 2022 11:07 am

KEY POINTS

The price increase comes at a time when coffee farmers are struggling with the high cost of farm inputs. A 50Kg bag of fertilizer now costs 6000 shillings, a 71 percent increase from fertilizer prices in 2021. Similarly, the shortage of planting materials such as coffee seeds has slowed the sector’s performance.

KEY TAKEAWAYS

The high inflation rate that triggers low purchasing power is likely to constrain the coffee sector despite increased domestic coffee consumption projections.

High demand has seen coffee prices jump by $83 (9,711 shillings) in the latest sale, to a high of $265 (31,000 shillings) from $182 (21,294 shillings) recorded in the last sale to the end of the main crop season.

“There was high demand for coffee during the sale with some traders not even getting whatever they wanted because of low supplies,’’ NCE chief executive Daniel Mbithi said.

However, there were not enough quality beans at the Nairobi Coffee Exchange (NCE) after the auction.

The NCE took a one-month break in May following the end of the main crop season and resumed in June, where it embarked on the short-season crop from eastern and parts of western Kenya until November, when the primary season will hit the market again.

The increased coffee prices come at a time when farmers are struggling with the high cost of farm inputs. A 50Kg bag of fertilizer now costs 6000 shillings, a 71 percent increase from fertilizer prices in 2021. Similarly, the shortage of planting materials such as coffee seeds has slowed the sector’s performance.

Related Content: Sub-Saharan Economy To Grow 3.7% In 2022, A Dip From 2021

The high inflation rate that triggers low purchasing power is likely to constrain the coffee sector despite increased domestic coffee consumption projections.

In 2020, Kenya exported USD 229 Million in coffee, making it the 25th largest exporter of coffee in the world. The same year, coffee was the 5th most shipped product in Kenya. The fastest-growing export markets for Coffee in Kenya between 2019 and 2020 were the United States, Switzerland and Germany.

Kenya, among the top five coffee producers in Africa, produces 800,000 bags of coffee annually. The coffee industry export earnings have improved by 33 percent between 2014 and 2021.

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.

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