NOTE: Agritrade is an affiliate of
the Technical Centre for Agricultural
and Rural Cooperation ACP-EU (CTA). The Technical Centre
for Agricultural and Rural Cooperation (CTA) is a joint international
institution of the African, Caribbean and Pacific (ACP) Group of States and the
European Union (EU). It is funded by the European Union. - Wondwossen
---
July 16, 2012
USDA
has posted its annual reviews of coffee production in Kenya, Uganda, Tanzania
and Ethiopia. The Kenyan report notes that record and near-record prices ‘have
increased interest in producing and exporting high-quality Kenyan coffee’, with
investments being made in improved varieties and production practices. USDA
projects exports of 725,000 60-kg bags in marketing year (MY) 2012 and 800,000 in
MY 2013. This will still be below the 900,000 60-kg bags achieved in
2008/09.
According
to USDA, Kenyan ‘AA’ beans will continue to be exported to the European market,
where they ‘benefit from a small niche market in the premium retail trade but,
reportedly, play a much more important role in blending to improve the general
quality of retail coffee’. Efforts are under way to increase the production of
AA-graded beans, while reducing costs and meeting ‘the many environmental and
social certification requirements’.
In
terms of marketing, USDA reports that Kenyan producers are questioning the
value-added role of the various government-related agencies. This is reportedly
leading to an increase in direct sales by producers. USDA reports a number of
Kenyan government initiatives including:
- the
introduction of a debt waiver for growers;
- the
establishment of a coffee development fund;
- restructuring
of coffee institutions;
- the full
liberalisation of coffee marketing through the introduction of direct
sales;
- the
development of national coffee standards as a benchmark code of practice
for producers to promote sustainability certification;
- the launch
of a Kenyan mark of origin.
Opportunities
for local blending using Kenyan, Tanzanian and Ugandan beans are currently
being explored. In this context, the USDA country report for Tanzania notes
that ‘European coffee traders source Tanzanian robusta beans to blend with
Kenyan AA coffee beans’, however there is currently only limited intra-regional
trade in Tanzanian robusta beans. Tanzania is also working to raise quality
standards to Kenyan levels, although the report suggests that ‘equality may be
some years away.
In
Tanzania, coffee sales largely take place through the Tanzanian Coffee Board
auctions. For Tanzania, Japan is the main market for arabica coffee bean (53%),
followed by Europe (22%) and the USA (17%). In contrast, 89% of Tanzanian
robusta bean sales are to Europe. Average prices on arabica bean sales to Japan
were reportedly 23% higher than average prices on sales to Europe, but only
1.6% higher than average sale prices to the US. The highest price of all in
2011, however, was on a small volume of sales (1.65%) to South Africa, where
average prices were 9% higher than sale prices for Japan. High export levels
are expected for 2013, with high prices reportedly driving an ‘astronomical’
take-up of new varieties of seedlings with ‘greater disease resistance,
productivity and quality’. Ninety per cent of production takes place on
smallholder farms (involving some 2 million Tanzanians).
USDA’s
report on Uganda notes that Europe provides the market for 80% of Ugandan
robusta and 90% of its arabica coffee production. Uganda’s other major market
for robusta beans is South Sudan. High prices have allowed Uganda producers to
buy additional inputs and expand production. Following a drop in 2010 in 2012
and 2013, Ugandan coffee exports are projected to exceed the levels reached in
2009, reaching some 3 million 60-kg bags.
East
African total coffee production and exports (’000 60-kg bags)
|
|
2009
|
2010
|
2011
|
2012
|
2013
|
|
Production
|
|||||
|
Kenya
|
900
|
700
|
680
|
780
|
805
|
|
Arabica
|
0
|
0
|
0
|
0
|
0
|
|
Robusta
|
|
|
|
|
|
|
Tanzania
|
644
|
392
|
600
|
640
|
700
|
|
Arabica
|
504
|
202
|
450
|
350
|
300
|
|
Robusta
|
|
|
|
|
|
|
Uganda
|
650
|
818
|
644
|
630
|
650
|
|
Arabica
|
2,610
|
2,052
|
2,568
|
2,700
|
2,800
|
|
Robusta
|
|
|
|
|
|
|
Exports
|
|||||
|
Kenya
|
980
|
740
|
654
|
725
|
800
|
|
Tanzania
|
1,201
|
804
|
1,010
|
851
|
951
|
|
Uganda
|
3,050
|
2,670
|
3,150
|
3,200
|
3,400
|
Source:
USDA, May 2012, see reports below
Africa’s
largest coffee producer, however, is Ethiopia. Ethiopia is the sixth largest
coffee producer in the world, and its production is largely smallholder-based
(95%). USDA’s report notes little progress in disease management and input
usage, although production is expected to increase slightly following good
rains. A further increase in production is projected for 2012/13. The spread of
root rot in some regions is overhanging the sector, as is the increased
commercial attractiveness of producing khat (a stimulant) for regional
markets.
According
to the report, while coffee accounts for 25–30% of total Ethiopian export
earnings, about half of all coffee produced is consumed locally, with a small
informal trade to neighbouring markets. Six of Ethiopia’s top 10 export
destinations are in the EU, accounting for 59% of exports in MY 2010/11.
Ethiopia’s
coffee trade is highly regulated by the government, with all export coffee
business requiring licences. Exports in MY 2011/12 are lower than normal due to
a dispute over packaging practices designed to reduce the dangers of disease
transmission, which had previously closed the Japanese market to Ethiopian
coffee exports. This dispute led to hoarding and government export bans on
individual companies.
In
2008, the Ethiopian Commodity Exchange (ECX) was established. It now handles
90% of coffee exports. However, its trade in coffee allows little scope
for product differentiation for single-origin coffees, with cooperatives and
farmers producing single-origin coffee trading on their own account. The ECX is
now working with Starbucks to find ways of addressing this shortcoming.
Ethiopian
arabica coffee production and exports (’000 60-kg bags)
|
|
2010/11
|
2011/12
|
2012/13
|
|
Production
|
6,113
|
6,320
|
6,450
|
|
Exports
|
3,235
|
2,733
|
3,650
|
Source:
USDA, GAIN Report ET 1202, 15
May 2012
Editorial comment
In
some parts of East Africa, a big issue is potential conversion of land use. In
Kenya, coffee estates in peri-urban areas of Nairobi are being converted to
real estate, and this is spreading to other smaller towns in coffee-growing
areas. This needs to be seen in the context of climate change, which is
projected to change agro-environmental conditions for coffee production and
require a redefinition of coffee-growing areas.
In
Ethiopia competition is primarily from khat production. In some instances, this
can be addressed by stabilising and enhancing coffee farmers’ incomes.
Such initiatives can be promoted through a variety of means, including:
- reducing
inputs costs to promoting value addition and/or product differentiation;
- improving
marketing;
- strengthening
the functioning of coffee supply chains by enhancing the bargaining
position of producers within supply chains.
These
factors raise the issue of the future role of government policies, agencies and
regulatory measures in the coffee sector.
Scope
for the development of cross-border processing of coffee and joint promotional
measures in new markets emerging from shifting patterns of global demand for
coffee need to be fully explored.
Such
a move could build on the type of regional product differentiation and
promotional strategy adopted in the Caribbean rum sector. Here, the
development of promotional campaigns around the regional ‘Authentic Caribbean
rum’ quality mark reduced the costs to individual companies of marketing branded
bottled rums, which were produced as part of a strategy to move away from the
export of bulk rum. With jointly developed and carefully targeted promotional
campaigns, this initiative has laid a solid basis for a fundamentally different
engagement of the Caribbean rum sector with the global economy.
----
Sources
USDA,
‘Kenya coffee annual report’, GAIN Report, 15 May 2012
USDA,
‘Tanzania coffee annual report’, GAIN Report, 23 May 2012,
USDA,
‘Uganda coffee annual report’, GAIN Report, 22 May 2012
USDA,
‘Ethiopia coffee annual report’, GAIN Report ET 1202, 15 May 2012