Coffee earnings dipped Sh15b in 2022/23

The Kenyan coffee market is grappling with a downturn in international demand, attributed to the ongoing global recession, coupled with delays in local coffee marketers offering sale beans at the Nairobi Coffee Exchange (NCE).

The slump is reflected in the decreased value of clean coffee sold through the NCE in the 2022/23 coffee year, dropping by $99.5 million (Sh15.1 billion) to $127.8 million (Sh19.6 billion) as of September 30, 2023, marking a significant 43.76 per cent decrease from the previous year’s $227.3 million (Sh34.7 billion). Lisper Ndungu, the acting CEO of NCE, cited the global recession as a key factor, resulting in reduced demand for Kenyan coffee in the international market. The industry also faced disruptions due to a regulatory regime change, leading to a 15.77 per cent decline in the volume of coffee sold through auctions, from 630,646 to 531,210 60kg bags.

Commodity exchange

The average coffee prices experienced a notable drop of 33.18 per cent, falling from $293.03 (Sh44,833.59) in September 2022 to $195.79 (Sh29,955.87) for the same period in 2023 per 50kg. This decline was largely influenced by a drop in the New York Intercontinental Commodity Exchange (ICE), a benchmark for Arabica coffees.

The regulatory shift implemented on July 1, 2023, mandated former coffee marketing agents to seek licenses from the Capital Markets Authority (CMA), contributing to the withholding of hundreds of thousands of bags of clean coffee. Low activity hit the market on reopening as international buyers hesitated due to perceived low quality.

Despite these challenges, the government says it remains dedicated to rejuvenating the coffee sector to top foreign exchange earner.