THEME UNLOCKING VALUE IN THE COFFEE INDUSTRY TOWARDS ENHANCED COMPETITIVENESS AND SUSTAINABILITY INTRODUCTION

Since the coming in of County Governments in March 2013, farmers across the coee growing regions have besieged their respec ve governments seeking support to revive the coee industry. Their main areas of concern revolve around high cost of produc on, management of their growers associa ons and declining returns from sale of their produce.

CHALLENGES
The coee industry in Kenya has been characterized by unstable produc on, declining and unpredictable coee prices. This is mainly a ributed to unreliable market outlets and market forces which are beyond the producers control. This is a sad and sorry state of aairs for the small scale coee producers who are the majority in the industry and who heavily rely on the crop for their livelihood. The main cause of this sad scenario is the monopoly of the coee Value chain by well posi oned players (cartels) who have established themselves in such a manner that they ensure that all the coee from the socie es is processed and marketed through them at their own dictated prices. This pricing mechanism is what is largely responsible for the decline in coee produc on in the country from a whopping 135,000 metric tons in 1999 to the current average of 45,000 metric tons of clean coee annually. A corresponding decline of acreage under coee has also been noted as farmers shi to other enterprises as an alterna ve due to disillusion with coee farming. The Coee Amendment Act (2001) put an end to the prac ce of holding mul ple licenses by individual players for milling, marke ng and buying of coee. It also opened a second window for marke ng of clean coee directly outside the Nairobi Coee Exchange. However, there has been collusion between the players and licensing agencies to circumvent the system. Sadly, today we have players who own coee mul ple licenses thus, accessing coee from coopera ves socie es illegally by mortgaging the crop in advance. Of major concern, is the huge indebtedness of the smallholder coee farmers leaving the mother coopera ve socie es highly exposed and some virtually insolvent. The scenario is aggravated by the backward integra on which creates almost absolute monopoly and exploita on by the major players opera ng under several pseudo names with mul ple licenses. In one extreme peculiar instance one player was sea ng in the board of the coee regulator. The situa on referred to above can never achieve compe ve coee prices for the producers. For instance, last year the highest price per kilogram of coee (cherry) was paid at Kshs 50.00 (USD 0.60cents). Therefore, at last year prices the farmer got Kshs 300 (USD1.60) per kg of milled clean coee or bean. In comparison, one kilogram of roasted AA beans retails at Kshs 4,000 (USD 47.0) in any of the coee retail shops in Nairobi city. The farmer, therefore, receives only 7% of the retail price and as low as 2% for the lower coee quality grades. The County governments in the coee growing region of Kiambu, Meru, Nyeri, Muranga and Kirinyaga, therefore, commit to the following principles as a regional ini a ve to salvage the coee industry: 1)That the Coun es will market their coee collec vely; 2)The Coun es will source quality fer lizers and other inputs collec vely to reduce cost and ensure be er returns to the coee farmers; 3)The Coun es will revitalize the agricultural (agronomy) extension services in order to increase coee produc vit y both in quality and quan ty; 4)The Coun es will pursue nancing partnerships that will ensure aordable, accessible and mely credit facili es to coee farmers; 5)The Coun es will progressively pursue ini a ves that will enhance gradual coee value addi on; and 6)The Coun es will aggressively promote local coee consump on.