Kenya 2011/12 coffee export earnings seen rising

Reuters

November 17, 2011

NAIROBI (Reuters) - Kenya expects its coffee export earnings to rise by 7 percent in the 2011/12 (Oct-Sep) season, buoyed by high international prices and increased volumes, the ministry of agriculture's top official said on Thursday.

Statistics from industry regulator Coffee Board of Kenya showed east Africa's biggest economy earned around 26 billion Kenyan shillings from exports of the commodity in 2010/11, up from 16 billion shillings a year earlier.

"We expected the current high prices to persist for some time and pull the overall earning this season," Agriculture Ministry Permanent Secretary Romano Kiome told reporters.

"We are looking at an earning of 28 billion (shillings) for this year because we have conducted major reforms to boost production and this has been iced by very good prices."

Kenya is a relatively small producer but its specialty beans are famous for their high quality and are much sought after for blending with coffee from other producers.

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.

Many small-scale coffee farmers disillusioned by poor earnings turned to other crops or sold land for real estate.

Under new industry rules, co-operatives can keep only 20 percent of net sales and must pass on the rest to farmers. Growers are also increasingly chasing out corrupt co-operative officials who siphoned off their cash.

"We have put in place reforms to encourage investment by growers and coffee farming is back," Kiome said.

During the ended 2010/11 season, Kenyan coffee prices hit an all-time high of $1,022 per bag for benchmark grade AA.

Kiome said production for the 2011/12 season was expected at about 52,000 tonnes as growers ramped up investments in existing farms and expanded to new areas to take advantage of the high prices of coffee.

"We expect production to climb going by the competition for seedlings," he said. "The more favourable prices are drawing growers back to the farms and that will reflect on output volumes."

With high prices on international markets, coffee was increasingly being stolen from farms and smuggled out of the country, Kiome said.

"Theft of coffee has become very serious especially around central Kenya. We believe a lot of coffee is going through our borders and especially to Uganda," he said.