KENYA: Kenya Coffee auction resumes trade after a week-long shut down

Record ID: 362819

  • Title: KENYA: Kenya Coffee auction resumes trade after a week-long shut down
  • Date: 29th January 2014
  • Summary: NAIROBI, KENYA, (JANUARY 28, 2014) (REUTERS) (SOUNDBITE) (English) DANIEL MBITHI, CHIEF EXECUTIVE, NAIROBI COFFEE EXCHANGE, SAYING: "I know the government has been trying to come up with some interventions to see that the coffee farmer does not continue suffering at the expense of the prices coming down but now as Nairobi coffee exchange we are yet to know what the govern
  • Embargoed: 13th February 2014 12:00
  • Keywords:
  • Location: Kenya
  • Country: Kenya
  • Topics: Business,Industry
  • Reuters ID: LVALNB9LJ7GUQT3U0GZZ24795R9
  • Story Text: Business was back to normal at the Nairobi Coffee Exchange on Tuesday (January 28) after a week-long closure of coffee auctions following a dispute on where the commodity can be sold.
    County governments in Kenya's coffee-growing areas earlier declined to issue transport permits to coffee marketing agents, and demanded a say in deciding to whom farmers can sell their coffee, stalling the auction.
    Movement of coffee to scheduled auctions is now being allowed while the parties work on resolving their differences.
    "Yes, last week when the auction was suspended the effect was that we had that sale not going through, that meant that the farmers were not able to be paid for that particular week unfortunately being the main crop this is the time that we expect a lot of people coming to the auction, that has really created a situation for us as the mangers of the Nairobi coffee exchange, and of course the money that was supposed to have come last week did not come and therefore we must say that that chunk of money did not come through, and more so to the farmers," said Nairobi Coffee Exchange chief executive, Daniel Mbithi.
    The dispute has pitted the Commercial Coffee Millers and Marketing Agents Association against the governments of the main coffee growing areas in five counties in central Kenya.
    Coffee is an important crop for many farmers in the region, who depend on it as their sole livelihood. It is also one of Kenya's major foreign exchange earners, with the country exporting about 90 percent of what is produced.
    The county governments want an overhaul of the supply chain in a bid to help farmers earn more from the commodity, which has been dominated by growers and a few marketing companies.
    The governors say they want to end what they term coffee buying cartels in the industry as well as to jointly market their coffee locally and abroad to boost prices.
    Kenya launched a devolved system of government last year to try to hasten rural development in 47 regional counties, but many fear the main result will be to spread the chronic corruption that plagues national politics to a local level.
    Coffee exports were at one time Kenya's leading foreign exchange earner, but mismanagement in the sector reduced output from a record 130,000 tonnes in 1987/88.
    Unpredictable rainfall and excessive droughts has also hampered production of the cash crop over the years.
    Many small-scale farmers disillusioned by poor earnings, have cut down their bushes and are turning to other crops or have sold land for real estate.
    "I know the government has been trying to come up with some interventions to see that the coffee farmer does not continue suffering at the expense of the prices coming down but now as Nairobi coffee exchange we are yet to know what the government is planning to do. I know they are planning on production which is a major issue, but on the price it is totally determined by the international market because we do over 90 percent, over 95 percent exports," said Mbithi.
    Although the east African nation is a small coffee producer relative to major players like Brazil and Vietnam, its speciality beans are much sought after for blending with those from other countries.
    Meanwhile industry regulator Coffee Board of Kenya says that existing marketing contracts are legally binding. Some sticking points include plans by local authorities to cancel existing marketing agreements between coffee marketers and farmers.
    The coffee bourse wants attention to focus on how farmers can take advantage of current promising market conditions instead and fetch good prices for their produce.
    "I'm seeing like the market is picking (up), the market is good in the sense that the lobbying market has gone down actually because our benchmark is the New York board of trade it has gone down from last week but the prices here are very steady, I didn't expect that but I can see most likely people were not able to meet the demands, the orders. They were not able to supply to the contracts that they had for last week. I would want to attribute that, to that - the fact that they were not able to supply, therefore it has caused the market to go up," said Mbithi.
    Kenya's government says it's working on reforms in the coffee industry in the hope that farmers can make better profits in future and improve their crop production.
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