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1.0 INTRODUCTION
 Coffee introduced in Kenya 1893
 Initially grown by European settlers
 Indigenous Africa involvement after reforms
 Major coffee expansion around independence period
 1952 = 3,000 acres – 11,864 farmers
 Currently – 170,000ha – 700,000 growers
 Smallholder 2/3 total area
 Estates 1/3 total area

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2.0 Climate, Soils and Production

2.1 Climate and Soils

 Kenya has a favorable climate

 Temperature extremes of less 19OC
 Well distributed rainfall of over 1000mm

 Presence of volcanic soils on high lands.

- attributed to uniqueness of Kenya Coffee.

 Coffee grown on the highlands – 1400 – 2000 meters above

sea level
 Unique Taste and Aroma is attributed to the volcanic soil
(acidic) altitude and climatic conditions.

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2.2 Production and Production Trends

 Kenya produces high valued mild arabicas

 Varieties:-
 SL 28, SL 34 Medium to high altitudes
 K7 Lower altitudes
 Ruiru 11 For all altitudes

 Annual coffee production fluctuation a consequence of :-

• Price
• weather
 Long terms trends influenced by profitability

 Production at independence - 43778Mt (1963

 Increased to 128,926mt in 1987/88
 Today it stands at 48,431Mt (2003/04), an all time low

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CONTD.
 Decline consequence of global coffee prices crisis

 Mild recovery likely in near future due to slight improvement

in coffee prices.

 Future production (2005/06) pegged at 60,000Mt or one

million bags.

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3.0 Production Trend of Green Beans
Coffee
(1997/98 – 2003/04)

Production trend of Green beans coffee(1997/98 - 2003/04)

120
100.7
100
Production (MT)(000)

80
68.1
60 53.4 51.7 51.8 55.4
48.4
40

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0
1997/98 6
1998/99 1999/2000 2000/2001 2001/2002 2002/2003 2003/200
Year
 3.1 National yields (Kg/ha) Trends

National yields(Kg/ha) Trends

700

600 592
500
Yields(Kg/ha)

400 400
329 326
300 304 305

200

100

0
1997/98 1998/99 1999/2000 2000/2001 2001/2002 2002/2003
Year

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4.0 Exports Value (million USD) Trends:
1997/98 –
2003/04
Exports value(million USD) Trends

250
211
200
157 161
Value USD

150

100 89
79 77
50
50

0
1997/98 1998/99 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004
Year

In 1997/98 average producer price was USD 3.97 per kg clean coffee
In 2003/04 the average producer price dropped to USD 0.54/kgcc
Currently due to price recovery averages were USD 2.35/kg in mid
January 2005.

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Farming Community
Large and small scale farming systems

 Over 700,000 smallholders grow coffee under 569 co-operatives

societies.

 Plantation sector comprises of 3,270 estates ranging from 2ha to

over 20ha

 Coffee farming supports over five million Kenyans both directly

and indirectly as a result of forward and backward linkages.

 Currently 170,000 hectares estimated to be under coffee with two-

thirds under the co-operative sector.

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Distribution of Production Per Sector

Distribution of production per sector

70
62.2
60
50
MT CC ('000')

39.4 38.5
40 34
32.1
28.7 28.8 29.9
30 26.924.8
21.3 23 21.4
18.5
20
10
0
1997/98 1998/99 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004
Year
Estates Co-operatives

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Contd.

Comparison of yields/ha for Estates versus co-operatives

1000 917
900
800
Yields/Ha (Kgs)

683
700 641
600 537 547
486 510
500 438
400 308
262 266
300 225 234
194
200
100
0
1997/98 1998/99 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004
Year
Estates
Co-operatives

Estates sector better managed than the cooperative sector

- Estates yields always much higher.
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Coffee Farming Value Chain Analysis

Value addition activities

 Appropriate land preparation

 Fertilizer application

 Pests and diseases control

 Irrigation

 Primary processing

 Secondary processing

 Facilities maintenance

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Smaller holder Farms:- Value Chain Analysis
Illustration
Yield of 400kg/ha of clean coffee (equivalent of 2870 kg/ha cherry) at
a cost of $531.31/ha ($ 0.181kg of cherry).

Plant
maintenance
27% spraying
33%

Land preparation
Harvesting
8%
19%
Fertilizer
application
13%

•Kenya coffee production is labour intensive.

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Large Estate Farms: Value Chain
analysis

Maintenance
repairs
7% spraying
19%
Administration
14%
Land preparation
7%

Plant maintenance Fertilizer

21% 12%

Harvesting
20%
•Plant maintenance constitutes the single largest value added activity
for large plantations
- Pruning alone takes 54.9%
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Coffee Processing
(i)Primary processing
 Over 95% of Kenya coffee is wet processed.
 The wet method involves the following stages
 Sorting/selection
 Pulping
 Grading
 Soaking
 Final wash
 Skin drying
 Final drying
 Conditioning

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Contd.

 Value chain analysis for primary processing (cooperative): -

Maintenance
13%
Packaging
5%

Transport
15%

Processing
67%

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Value chain analysis for primary
processing(estates)

Maintenance
14%
Packaging
4%
Transport
10%

Processing
72%

-Estates spend 2.5 times more on every activity when compared with
the cooperative sector,hence the higher capacity
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Secondary Processing (Milling )

 Installed milling capacity 210,000mt against national

production 48,000mt clean coffee

 Coffee milled and graded into seven grades (AA, AB, PB,
E, C, T, TT)

 Milling and grading costs average US$ 63/mt

 Overall export averages us$85.00/mt

 Capacity utilization 22%

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Capacity utilization
 A total of 2680 pulping stations exist in the country
 Co-operatives own 1000 units
 Each unit capacity averaged at 140 mt/year but
annual throughput is estimated at 29mt/factory
 Therefore capacity utilization is at 21%
 Estates capacity utilization 44%

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Tertiary Processing and Marketing
 Largest proportion of value accrues to roasters

 Efforts to add value being done by way of:-

 Roasting domestically for local consumption
 Roasting for export
 Export green beans for roasting at consumption
point.

 There are 18 licensed roasters in Kenya today

 Problem of gaining shelf space in supermarkets an

issue

 Stiff competition likely from established brands

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Kenya Coffee Exports Destinations
 Kenya coffee classified with Colombian milds

 Is facing stiff competition from similar coffees of other

origins

 Destinations
 Germany
 Belgium/Lux
 Austria
 Switzerland
 Nordic
 Canada
 U.S.A
 Japan
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Kenya Exports by country

Fig a: Kenya Exports by country

O th ers
17%
Italy
2%
G erm an y
F rance 35%
2%
US A
7%
Sau d i Arab ia
4%
F in lan d
Sw ed e n
4%
8%
UK
B elg iu m /L u x
7%
7%
Neth erlan d s
7%

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Fig. B: Kenyan Exports by Region

Fig b: Kenya exports by region

North Africa/middle
East
9% USA
10%
Southern Europe
4%
Nordic
18%

Northern Europe
59%

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Roasting Green Beans at the place of
consumption

Fig C: Specialty Coffee Value chain

Exporter Marketing A./Millers
1% Levies
1%
Importer Co-op.
2% 2%
Growers
7%

Roaster
54% Retailer
33%

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U.S.A MARKET

 Americas (USA &Brazil) highest consumers of coffee.

F ig d: G lob a l C o ffe e C o ns um ptio n, 2 0 0 2

C e n tra l & E a s te rn
E u ro p e
8%

W e s te rn E u ro p e A s ia & P a c ific
33% 14%
A fric a & M id d le
East
7%

A m e ric a s
38%

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THE SPECIALTY/GOURMET MARKET
SEGMENT
 Fastest growing market segment in U.S.A

 U.S market countries to dominate specialty sales, courtesy of

S.C.A.A efforts.

 International Trade Center segments the specialty coffees into

three categories:-
 Exemplary quality
 High quality/premium brands
 Mainstream qualities

 SCAA efforts to establish standards for certification of coffee

acknowledged.

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POLICY SHIFT
 Coffee Board of Kenya regulatory role while marketing
function is privatised.

 Inclusion of direct sales parallel to central auction

 Operationalization of coffee development fund

 Government allocation of Ksh. 500 million in current
budget

 Encouragement of private investment in value addition

 Facilitation of joint ventures or partnerships with roasters

and buyers

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CONCLUSION
 Introduction of second window (Direct Sales) a good
opportunity for investors
 Traceability of their product.
 Relationship marketing (joint ventures/partnerships)
with producers
 Branding (Geographical indications Gis/Appellations)

-E N D -

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