KENYA: Output of Coffee Goes Up By 6 Per Cent

Reuters

NAIROBI, Thursday March 16, 2007

Kenya’s coffee output in 2006 rose by six per cent to 50,528 tonnes, compared with the previous year. This was due to better prices and favourable weather, a monthly economic review by the central bank said today.

The production has suffered due to poor earnings and mismanagement in the small holder sector.

“The upturn in the coffee output reflected improved crop husbandry and favourable weather,” the Central Bank of Kenya bulletin said, adding the country produced 47,650 tonnes in 2005.

“The modest growth was also boosted by favourable trends in prices which rose from $2,329 per tonne in 2005 to $2,649 per tonne in 2006,” it said.

Kenya’s coffee sector, whose output peaked at 130,000 tonnes in the 1987/88 crop year, has been recovering in the past four years after reforms to reverse nearly two decades of decline.

Already highly indebted due to poor earnings and high production costs, many smallholder farmers have had little access to affordable credit, which analysts say has been a major reason behind the deterioration.

But the Government has written off a Sh5.3 billion ($76.31 million) debt owed by cooperative societies and unveiled plans to provide Sh3.5 billion for credit to farmers buy farm inputs or equipment.

It also has allowed direct sales between Kenyan farmers and roasters abroad, which was formerly illegal, to boost income by cutting out a long line of middlemen.

Kenyan coffee prices dropped at this week’s auction due to the large volume of high quality beans offered, exporters said on Wednesday. A total of 31,884 60-kg bags were up for sale, with 20,185 finding buyers. A further 33,871 bags will be offered at next week’s auction.

“There was more coffee and of better quality than the last auction. The market is flooded, so the prices came down,” an official at an export company said.

The average price per 50-kg bag sold at the weekly auction, held on Tuesday, dropped to $110.11 from $116.22 previously. “...prices were generally deflated for all qualities.

This may be reflective of the increased quantities on offer,” an auction report by the Ransley Coffee Company said.

“There was good general demand for better qualities despite some major buyers not being active,” it added.

Last week’s auction saw a big rise in prices — some AA fetched $411 per 50-kg bag — as exporters competed for the premium quality.

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Source: Daily Nation