Poor roads affect market for East Africa coffee

By Evelyn Njoroge
Capital Business

January 13, 2010

NAIROBI, Kenya - Ten Eastern African coffee producing countries are losing approximately Sh7.5 billion per year due to inefficiencies in transportation of the produce to international markets.

Eastern African Fine Coffees Association (EAFCA) Executive Director Philip Gitao said on Wednesday that it takes about 100 days to deliver coffee from the ports of Mombasa and Dar-es-salaam to the USA which affects both its quality and the prices it fetches.

“We have very many issues in terms of logistics and infrastructure which means that coffee moving from point A to the final buyer is a lot longer. The time taken in terms of delivering coffee from the warehouses to the ports affects the quality as well because of the temperatures, moisture and humidity,” said the director of the association with members from Kenya, Tanzania, Uganda and Ethiopia. Others include Rwanda, Burundi, Zambia, Zimbabwe, Malawi and South Africa said.

A study conducted a few years ago showed that it takes 15 days to transport coffee from the warehouses to ports in Latin America while it takes 45 days to do the same in the Eastern African region.

He said the congestion at the ports and the increased traffic of sea containers further complicate the situation thus affecting the region’s competitiveness.

“This does affect us greatly and it’s an issue that we would like to sensitise the governments in the region because we are producing fantastic coffee and there’s no reason why we should be delaying and affecting our productions,” he added.

Mr Gitao said at a media briefing that although production in the region is not expected to increase in 2009/2010 owing to the effects that climate change, pests and diseases and poor agronomic practices have on the crop, consumption of the beverage is on an upward trend.

“We are seeing an increase in domestic consumption within the region. Ethiopia has always been the highest consumer (135,000 MT), consuming up to 50 percent of its production followed by South Africa which doesn’t produce much but is consuming a lot of the coffee (22,000MT),” he said.

Consumption in Kenya, Uganda and Tanzania is at three percent which although small is said to be growing largely pushed by the number of coffee shops that have and continue to spring up in major cities.

Overall, the 10 EAFCA member countries consumed an estimated 172,000 MT of coffee in the 2008/09 crop year which represents about a third of the 611,000 MT they produced.

Although coffee production is expected to go up in Ethiopia, Burundi and Tanzania in the 2009/2010 crop year, a drop is forecast in Kenya and Uganda. Kenya’s production for example is expected to decline to 45,000 Metric tonnes from the 57,000 tonnes recorded in 2008/2009 crop year.

Globally however, total production is projected to be between 7.3 million MT and 7.5 million MT during the year, according to estimates by the International Coffee Organisation’s.

Despite the challenges experienced in the industry however, coffee prices in Eastern Africa have held up well compared to other commodities in the world markets.

A stakeholder in the sector disclosed that at the auction on January 12, they sold about three percent of Kenya’s annual production at $4.72 (Sh354) per kilo. This is in comparison to 2002/2003 when the country’s total annual crop was sold at $1.21 (Sh90.75) per kilo.

A report dubbed ‘EAFCA’s Coffee Outlook 2010’ shows that the demand for the coffee in the world market has continued to rise and that it will outstrip production in 2010 which is good news for the industry.

During the function, the Coffee Board of Kenya outlined plans to promote production and consumption in the country. The Board’s Managing Director Louise Njeru disclosed that in two week’s time, they would launch a new variety of re-branded Kenyan coffee.

“We know that when you go out there, you will find a semblance of what is said to be Kenyan coffee but we want to make it such that regardless of what country you are in, you will be able to associate a symbol - be it a mark of origin or a logo with Kenyan coffee,” she said.

She urged industry players to support the initiative which would represent a ‘win-win’ situation for all parties involved.