Coffee, tea farmers face sharp drop in earnings as prices fall

A farmer inspects her coffee plants. A coffee farmer in Nyeri . Coffee prices have dropped. Photo/FILE 

A farmer inspects her coffee plants. A coffee farmer in Nyeri . Coffee prices have dropped. Photo/FILE 

By GEOFFREY IRUNGU

Coffee and tea prices have fallen by 33 per cent and 26 per cent since the beginning of the year, signalling a sharp drop in farmers’ earnings.

Coffee farmers are expected to be hit much harder by a corresponding drop in production volumes, but an increase in tea harvest over a similar period last year is expected to ease impact of the price drop.

According to the leading economic indicators from the Kenya National Bureau of Statistics (KNBS), coffee prices were down to Sh229.83 per kilogramme (kg) in May from an average of Sh344.30 per kilo in January.

Managing director of Thika Coffee Mills, David Wafula, attributed the drop in prices to lower quality of coffee beans produced in the period.


“From December to a part of February, the quality of the beans wasn’t that good,” said Mr Wafula. The fall in prices has almost been by the month except in March when it rose compared to February, but still remained below January’s figure.

The coffee quantities have also been lower in the first five months of this year totalling 23,358 metric tonnes against 24,865 metric tonnes realised in the same period last year.

The total value of earnings for coffee farmers was Sh6.94 billion compared to Sh9.58 billion in the same period last year —Sh2.64 billion less.


“The quantity of coffee auctioned at the Nairobi Coffee Exchange [auction firm] declined from 6,038 metric tonnes in March 2013 to 4,483 metric tonnes in April 2013 while its average auction price fell from Sh278.89 per kg to Sh229.83 per kg in the same period,” said the KNBS data.

Mr Wafula said production of the crop is expected to increase in the remainder of the coffee year which ends in September.


“We believe the total coffee production will be significantly higher than last year,” said Mr Wafula.

Production

The decline in tea prices has been steady since January but the production volume has varied during the four months, even though it has remained generally higher than in the same period last year. Prices fell to Sh210.09 per kg from Sh284.11 in January.

In January, tea production stood at 45,390 metric tonnes but had dropped to 38,230 metric tonnes in April. In relation to last year, the quantities are higher due to the better rains this year.

In April alone, tea prices fell to Sh210 from Sh240 a kg in March, representing a 12.5 per cent change— the single largest fall since the beginning of the year. The fall also came with an increase in quantities during the month.

“The quantity of processed tea increased from 33,368 metric tonnes in March 2013 to 38,230 metric tonnes in April 2013 while its average auction price dropped from Sh240.73 per kg to Sh210.09 per kilo over the same period,” said the KNBS data. The onset of the rains and reduced demand in countries that are approaching the summer season—when there is less demand for hot beverages—was also said to have affected demand.

“Good weather since late last year has contributed to the fall in prices. Countries such as Egypt, which buys our tea in large quantities, couldn’t afford to buy our expensive teas,” said the deputy general manager at Mombasa-based Prudential Tea Brokers (E.A.) Elvis Nduati.

“We are expecting things to change since the cold weather is here...it normally pushes up demand,” he said.