Headlines

Push For Minimum Returns Fund As Coffee Earnings Remain Low

BY Jane Muia · December 24, 2022 07:12 am

KEY POINTS

Kenya sells more than 95 percent of its coffee to the world market. If the demand for the commodity in the world market decline, it means that the local prices will be highly impacted given that the international prices are used as a benchmark for the local price at the Nairobi Coffee Exchange.

KEY TAKEAWAYS

The earnings in this period were up 62 percent to hit $210 million compared with $129 million in a similar period last year.

Brazil-the world’s largest grower had experienced low production as a result of bad weather, setting the stage for good earnings for Kenya’s coffee.

The Kenya Coffee Planters Association (KCPA) has asked the government to implement the guaranteed minimum returns promised by Wiliam Ruto in his manifesto.

According to KCPA, the minimum returns will cushion farmers from losses at a time when the value of the commodity is diminishing.

Peter Gikonyo, KCPA chairman said the coffee value is projected to remain low in the coming months owing to a global surge in the cost of production.

“We want the government to implement the guaranteed minimum return as promised in the manifesto to improve the livelihood of farmers who are facing one of the lowest prices amid a rising cost in production,” said Gikonyo.

The prices of the beverage have been recording unimpressive performance for the past two months, with a 50-kilo bag selling at less than $200 from a high of $300 in May. The prices are projected to dip further owing to a projected surplus of the commodity in the world market occasioned by a good crop from Brazil and Central America. Colombia and Mexico are also witnessing good weather for harvesting.

It also means that earnings for this crop year will fall compared to the previous crop season. In the eight months to August 2022, the coffee earnings increased by $81 million compared with a similar period in the last crop season.

This was helped by a high volume of the bean at the auction which was 46 percent higher. The earnings in this period were up 62 percent to hit $210 million compared with $129 million in a similar period last year.

During the period, Brazil-the world’s largest grower had experienced low production as a result of bad weather, setting the stage for good earnings for Kenya’s coffee.