Coffee prices slump in Kenya

Kenyan coffee prices have taken a nosedive in recent times, leaving farmers in a state of distress. Maina Muriithi, Chairman of the Iriani Farmer Cooperative Society, highlighted the significant drop in coffee prices by over 60% in 2022. This drastic decrease has left farmers pondering what might have led to such a sharp decline in prices while their input costs and other global commodity prices continue to rise. The issue was further exacerbated when the Nerobe Coffee Exchange attributed the plummeting prices to an oversupply of coffee in the global market, which raised further questions among farmers. Muriithi questioned why other commodities like tea, wheat, and milk were not facing similar price drops, especially when Kenyan coffee commanded high prices in Europe. He expressed concerns over the pricing mechanism at play and the lack of transparency in how the market values their produce. Farmers are grappling with the disparity between the prices offered to them locally and what European buyers are willing to pay for Kenyan coffee. The discrepancy of hundreds of dollars per bag prompted Muriithi to question the justification behind such variations. He shed light on the challenges faced by farmers, who are being coerced into selling their produce at significantly lower prices compared to the international market rates. The restrictive conditions imposed by market intermediaries further compound the plight of farmers, who are struggling to make ends meet. The situation in Kenya is exacerbated by a recent drought that has impacted production levels. Muriithi emphasized that the cost of coffee production in Kenya is significantly higher than in neighboring countries like Uganda, Tanzania, and Ethiopia, leading to decreased competitiveness. He noted that while production costs in Kenya are four times higher than Uganda and three times higher than Tanzania and Ethiopia, the lack of support and conducive policies for farmers have contributed to the decline in production. This imbalance in production costs has further widened the gap between supply and demand dynamics, resulting in lower earnings for farmers. The ramifications of plummeting coffee prices extend beyond the immediate financial strain on farmers. Muriithi underscored the ripple effect on the industry, as declining prices deter farmers from investing in coffee cultivation, ultimately leading to a decrease in production capacity. The ripple effect reaches buyers at the end of the value chain, who are anticipating affordable prices but are met with challenges due to the dwindling supply of quality coffee. In order to address these challenges and revitalize the coffee sector in Kenya, Muriithi emphasized the need for government intervention. He called for the implementation of the recommendations put forth by the Romano Professor K. task force report, which outlined strategic measures to bolster the coffee industry. Muriithi urged the government to prioritize the interests of farmers, enhance transparency in pricing mechanisms, and eliminate barriers that hinder farmers' access to the market. By advocating for policy reforms that empower farmers and promote fair trade practices, Muriithi envisions a future where Kenyan coffee farmers can thrive and regain their position as key players in the global coffee market.