East Africa smells the coffee and moves to expand market

A worker getting a sample of coffee beans during the roasting process at Dormans coffee factory in Nairobi on April 6, 2016. A rising demand for high quality coffee and coffee shops in Kenya has pushed coffee companies to focus more on their domestic markets. AFP PHOTO | CARL DE SOUZA 

In Summary

• According to a report released last month by Kenya’s Coffee Sector Implementation Reforms Committee (CSIC), Kenya brought the rear at 3.2 per cent growth in the absence of data from conflict-plagued Burundi.
• Uganda is targeting new markets to grow its exports to 15 per cent — a fivefold increase of the country’s share on the global market.
• Also keen on new markets is Tanzania, which has set its sights on China and Russia. Japan, Germany, Italy, United States and Britain.

By The EastAfrican
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Growth and optimism are two terms that capture, first, the performance of East Africa’s coffee sub-sector and, second, its future.

Starting with Uganda, which led in performance, recording a 36 per cent growth in production, more than double that of Rwanda and Ethiopia — at 17.6 and and 16.3 per cent, respectively, the region did well for itself.

According to a report released last month by Kenya’s Coffee Sector Implementation Reforms Committee (CSIC), Kenya brought the rear at 3.2 per cent growth in the absence of data from conflict-plagued Burundi.

It is this positive outlook, especially in the global markets, that has the region’s coffee producers considering increased production and expansion to new markets.

Uganda, for example, is targeting new markets to grow its exports to 15 per cent — a fivefold increase of the country’s share on the global market.

“There is a huge demand for our coffee in China, Russia, the Middle East and North Africa,” said Uganda Coffee Development Authority managing director Emmanuel Iyamulemye Niyibigira.

“With these markets, we would be growing our global coffee exports from 3 per cent now to 15 per cent — hopefully,” Mr Iyamulemye told The EastAfrican on the sidelines of the 16th African Fine Coffee Association (AFCA) conference in Kampala, that ran from February 14 to 16.

Also keen on new markets is Tanzania, which has set its sights on China and Russia. Japan, Germany, Italy, United States and Britain.

Rising prices

Rwanda’s coffee farmers are upbeat about future prospects, as a result of rising prices on the international market. Many of the over 400,000 farmers are now expanding their coffee acreage to increase production.

The National Agricultural Development Export Board (NAEB) has increased additional 1,500 hectares under coffee in Kirehe, Rulindo, Gakenke and Nyamagabe areas.

This sits well with the position of coffee as the country’s leading export crop, accounting for 24 per cent of agricultural exports.

While Kenya is guided by the Coffee Sector Implementation Reforms Committee, Tanzania is going by the Coffee Industry Development Strategy, which is expected to raise production, with new farmers in the rich-soil southern regions, improved agricultural outputs and farming technologies.

The government targets to raise production from the current 50,000 tonnes to 100,000 tonnes in the next three years. The coffee sub-sector supports about 400,000 smallholder farmers, who produce 90 per cent of the Tanzania’s coffee.

In Burundi, where a political crisis has left the economy in limbo for over two years, coffee makes up 27 per cent of total exports, with agriculture making up 40 per cent of the country’s GDP, according to a report by Deloitte.

There are 600,000 to 800,000 coffee producers in Burundi, mainly in Buyenzi, Mumirwa and Kirimiro in the north. Specialty coffee production is growing, promoted by Café du Burundi/InterCafé Burundi, the association for coffee professionals, with auctions in Bujumbura and exports by individual businesses.

Though Kenya’s production has declined by over 65 per cent — from 130,000 tonnes in the late 1980s to around 45,000 tonnes now — and the area under coffee has gone down from 170,000 hectares in 1987 to 114,000 hectares in 2015/2016 season, Prof Joseph Kieyah-led Coffee Sector Implementation Reforms Committee is focusing on production, value addition and marketing to revive the sub-sector.

Challenges

Prof Kieyah also chairs a taskforce appointed by President Uhuru Kenyatta to look at ways of turning the subsector around. The cause of low production, according to the team, is high cost of farm inputs, poor returns and delayed payments to the growers.

The CSIRC has addressed some of these issues, starting with a subsidised fertiliser programme. The government also wrote off farmers’ debts.

In Uganda, despite exporting a record 4.6 million 60kg bags of green coffee and earning $545 million last year, for years, the country’s share of exports on the global market has stagnated at 3 per cent.

But increased yield from the newly planted coffee, containing the coffee wilt disease and mitigating the effects of climate change – which are some of the measures to increase output to an ambitious 20 million bags by 2025 – Uganda could inch closer to the share of powerhouses like Vietnam, Colombia and Honduras on the global export market.

But the target of 20 million bags by 2025, which was recently revised from the earlier set timeline of 2020, is dependent on output increasing annually as the country implements its coffee roadmap, which also involves creating demand, increasing value addition.

In Rwanda, NAEB is optimistic that the growth in prices will spur production and generate more revenues from exports. In 2017, coffee exports generated $64 million, an estimated 10 per cent increase, from $58 million generated in 2016.

“We have had an increase in the number of coffee washing stations from 245 in 2015 to 297 in 2017, which has increased the volume of fully washed coffees that we export and as the quality grows, the price also rises,” said Bill Kayonga, NAEB chief executive.

— By Julius Barigaba, Muchemi Wachira, Moses Gahigi and Apolinari Tairo