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USDA Attaché: Kenya’s Coffee Production Expected to Increase to 750,000 bags

By: Diana Delgado, Contractor

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USDA Attaché: Kenya’s Coffee Production Expected to Increase to 750,000 bags

Coffee Network (Bogota)- Kenya’s coffee production will increase from 700,000 to 750,000 60-kg  bags in marketing year 2021/22 due to anticipated good weather and improved farm practices in response to higher prices, while exports are expected to increase 3% to 720,000 bags, the US Agriculture Department said.

Production

Kenya’s coffee production is forecast to increase by 7% from 700,000 to 750,000 bags of 60-kg due to higher yields from good weather, better crop husbandry practices, and an anticipated high-producing period in Kenya’s coffee production cycle. Weather projections for MY 2021/22 indicate that many coffee-growing regions will receive rainfall and temperatures which are conducive to coffee growing. Additionally, yields are projected to increase due to improved crop husbandry practices by farmers as growers rehabilitate their farms and increase inputs in response to improved prices. MY 2021/22 is also expected to be a cyclical peak production year for most trees in Kenya. Coffee trees undergo annual variations in their yield, usually increasing two consecutive years and falling the third. Area planted is revised down from 112,000 to 105,000 hectares in MY 2020/21 as many large farms have been converted into real estate development, particularly in peri-urban areas such as Kiambu and Nyeri. This trend will continue in MY 2021/22 but will be offset as some growers plant new trees outside of peri-urban areas in response to high prices this year.

Exports

In the coffee year 2021/22 coffee exports are expected to increase by 3% from 700,000 to 720,000 bags due to higher production yields. Kenya’s mild arabica coffee accounts for less than one percent of the world’s coffee exports of the variety. As a result, most coffee from Kenya is consumed as specialty coffee and used to enhance coffee blends. Over 90% of Kenyan coffee is sold through the NCE while the rest is done via negotiated contracts between private parties. In MY 2019/20, the United States regained its position as the leading export destination for Kenyan coffee. Other key destinations include Germany, Belgium, and South Korea.

Consumption

Local consumption will remain depressed in MY 2020/21 due to the impact of COVID-19 on the restaurant and hospitality sectors, but will recover slightly from 36,000 to 43,000 bags in MY 2021/22 as Kenya’s tourism sector improves.

As most consumers in Kenya continue to prefer tea over coffee, Kenyan consumption is driven by tourism, immigration, and rising domestic consumption in urban areas where coffee culture is taking root. While MY 2021/22 consumption is expected to increase, it is not forecast to recover to pre pandemic levels. While Kenya may see an increase in vaccinated tourists next year, Kenya itself may not achieve high vaccination levels over this timeframe. Prior to the pandemic, coffee consumption in Kenya was growing, particularly through increased investment in coffee houses. Additionally, several businesses set up training facilities to promote coffee preparation and consumption.

Government

In April 2020, the Government of Kenya (GOK) announced a $14 million coffee revitalization program, with the majority of these funds allocated to improving coffee processing and the rest dedicated to input use and support for cooperatives. The impact of this program will likely not be observed until after 2022. Marketing Over 70 percent of coffee in Kenya is marketed by co-operatives while the remainder is done by corporate and individually owned businesses. Since 2020, the GOK has supported co-operatives through a $26 million fund that is managed by the New Kenya Planters Cooperative Union (New KPCU), a public entity and successor to the defunct Kenya Planters Cooperative Union. Under the program, cooperative farmers who use NKPCU to market their crop receive working capital funds to increase their production. A previously announced takeover of the Nairobi Coffee Exchange (NCE) by the Capital Market Authority (CMA) is on hold due to legal complications, bringing uncertainty and potentially disrupting the management of NCE auctions.

Imports

In 2021/22 imports of soluble coffee are forecast to increase modestly from 11,000 to 13,000 bags due to increased consumption in the hospitality sector as vaccinated tourists begin to return to Kenya. Prices NCE coffee prices have surged significantly since the start of MY 2020/21 due to increased purchases by traders and roasters and concerns over shortages of top-quality coffees. Industry sources indicate the quality of coffee presented at NCE has improved lately which will help sustain higher prices. The favorable price trend is expected to encourage farmers to intensify production going into MY 2021/22.

Stocks MY 2021/22 ending coffee stocks are expected to remain at 180,000 bags as traders maintain stocks to cover exports during the fall before the next harvest arrives at market in January. Stocks will largely be held by millers, marketing agents, and exporters, while some will also be held by individual large-scale farmers and co-operatives in the form of parchment coffee.

By Diana Delgado

  • Coffee

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