8/9/2019 The Coffee Sector Presentation - Kenya
1/28
1
8/9/2019 The Coffee Sector Presentation - Kenya
2/28
2
1.0 INTRODUCTION Coffee introduced in Kenya 1893
Initially grown by European settlers
Indigenous Africa involvement after reforms
Major coffee expansion around independence period
1952 = 3,000 acres 11,864 farmers
Currently 170,000ha 700,000 growers
Smallholder 2/3 total area
Estates 1/3 total area
8/9/2019 The Coffee Sector Presentation - Kenya
3/28
3
2.0 Climate, Soils and Production2.1 Climate and Soils Kenya has a favorable climate
Temperature extremes of less 19OC
Well distributed rainfall of over 1000mm
Presence of volcanic soils on high lands.
- attributed to uniqueness of Kenya Coffee.
Coffee grown on the highlands 1400 2000 meters abovesea level
Unique Taste and Aroma is attributed to the volcanic soil(acidic) altitude and climatic conditions.
8/9/2019 The Coffee Sector Presentation - Kenya
4/28
4
2.2 Production and Production Trends
Kenya produces high valued mild arabicas Varieties:-
SL 28, SL 34 Medium to high altitudes K7 Lower altitudes Ruiru 11 For all altitudes
Annual coffee production fluctuation a consequence of :- Price weather
Long terms trends influenced by profitability
Production at independence - 43778Mt (1963 Increased to 128,926mt in 1987/88 Today it stands at 48,431Mt (2003/04), an all time low
8/9/2019 The Coffee Sector Presentation - Kenya
5/28
5
Decline consequence of global coffee prices crisis Mild recovery likely in near future due to slight improvement
in coffee prices.
Future production (2005/06) pegged at 60,000Mt or onemillion bags.
CONTD.
8/9/2019 The Coffee Sector Presentation - Kenya
6/28
6
3.0 Production Trend of Green BeansCoffee(1997/98 2003/04)
Production trend of Green beans coffee(1997/98 - 200
53.4
68.1
100.7
51.7 51.855.4
48.4
0
20
40
60
80
10 0
12 0
1997/98 1998/99 1999/2000 2000/2001 2001/2002 2002/2003 2003/20
Year
Production(MT)(000)
8/9/2019 The Coffee Sector Presentation - Kenya
7/28
7
3.1 National yields (Kg/ha) TrendsNational yields(Kg/ha) Tren
32 9
40 0
59 2
30 4 30 532 6
0
10 0
20 0
30 0
40 0
50 0
60 0
70 0
1 997 /98 1 99 8/99 19 99/20 00 2 000 /20 01 20 01/20 02 200 2/2 003
Year
Yields(Kg/ha)
8/9/2019 The Coffee Sector Presentation - Kenya
8/28
8
4.0 Exports Value (million USD) Trends:1997/98 2003/04Exports value(million USD) Trends
211
157 161
79 77
50
89
0
50
100
150
200
250
1997/98 1998/99 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004
Year
ValueUS
In 1997/98 average producer price was USD 3.97 per kg clean coffeeIn 2003/04 the average producer price dropped to USD 0.54/kgccCurrently due to price recovery averages were USD 2.35/kg in mid
January 2005.
8/9/2019 The Coffee Sector Presentation - Kenya
9/28
9
Farming CommunityLarge and small scale farming systems
Over 700,000 smallholders grow coffee under 569 co-operativessocieties.
Plantation sector comprises of 3,270 estates ranging from 2ha to
over 20ha
Coffee farming supports over five million Kenyans both directlyand indirectly as a result of forward and backward linkages.
Currently 170,000 hectares estimated to be under coffee with two-
thirds under the co-operative sector.
8/9/2019 The Coffee Sector Presentation - Kenya
10/28
10
Distribution of Production Per SectorDistribution of production per sec
21.3
28.7
38.5
26.923 21.4
18.5
32.1
39.4
62.2
24.828.8
3429.9
0
10
20
30
40
50
60
70
1997/98 1998/99 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004
Year
MTCC
('000')
Estates Co-operatives
8/9/2019 The Coffee Sector Presentation - Kenya
11/28
11
Contd.Comparison of yields/ha for Estates versus co-operatives
537
683
917
641
547510
438
262
308
486
194225 266 234
0
100
200300
400
500
600
700
800
900
1000
1997/98 1998/99 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004
Year
Yields/Ha(Kg
EstatesCo-operatives
Estates sector better managed than the cooperative sector
- Estates yields always much higher.
8/9/2019 The Coffee Sector Presentation - Kenya
12/28
12
Coffee Farming Value Chain AnalysisValue addition activities Appropriate land preparation
Fertilizer application
Pests and diseases control
Irrigation
Primary processing
Secondary processing
Facilities maintenance
8/9/2019 The Coffee Sector Presentation - Kenya
13/28
13
Smaller holder Farms:-Value Chain AnalysisIllustration
Yield of 400kg/ha of clean coffee (equivalent of 2870 kg/ha cherry) at
a cost of $531.31/ha ($ 0.181kg of cherry).
spraying
33%
Land preparation
8%
Fertilizer
application
13%
Harvesting
19%
Plant
maintenance
27%
Kenya coffee production is labour intensive.
8/9/2019 The Coffee Sector Presentation - Kenya
14/28
14
Large Estate Farms: Value Chainanalysis
Land preparation
7%
Fertilizer
12%
Harvesting
20%
Administration
14%
Maintenance
repairs
7%
Plant maintenance
21%
spraying
19%
Plant maintenance constitutes the single largest value added activity
for large plantations
- Pruning alone takes 54.9%
8/9/2019 The Coffee Sector Presentation - Kenya
15/28
15
Coffee Processing(i)Primary processing Over 95% of Kenya coffee is wet processed.
The wet method involves the following stages
Sorting/selection
Pulping
Grading
Soaking Final wash
Skin drying
Final drying
Conditioning
8/9/2019 The Coffee Sector Presentation - Kenya
16/28
16
Contd. Value chain analysis for primary processing (cooperative): -
Processing
67%
Transport
15%
Packaging
5%
Maintenance
13%
8/9/2019 The Coffee Sector Presentation - Kenya
17/28
17
Value chain analysis for primary
processing(estates)
Processing
72%
Transport
10%
Packaging
4%
Maintenance
14%
-Estates spend 2.5 times more on every activity when compared with
the cooperative sector,hence the higher capacity
8/9/2019 The Coffee Sector Presentation - Kenya
18/28
18
Secondary Processing (Milling) Installed milling capacity 210,000mt against national
production 48,000mt clean coffee
Coffee milled and graded into seven grades (AA, AB, PB,E, C, T, TT)
Milling and grading costs average US$ 63/mt
Overall export averages us$85.00/mt
Capacity utilization 22%
8/9/2019 The Coffee Sector Presentation - Kenya
19/28
19
Capacity utilization A total of 2680 pulping stations exist in the country
Co-operatives own 1000 units
Each unit capacity averaged at 140 mt/year but
annual throughput is estimated at 29mt/factory Therefore capacity utilization is at 21%
Estates capacity utilization 44%
8/9/2019 The Coffee Sector Presentation - Kenya
20/28
20
Tertiary Processing and Marketing Largest proportion of value accrues to roasters
Efforts to add value being done by way of:- Roasting domestically for local consumption Roasting for export
Export green beans for roasting at consumptionpoint.
There are 18 licensed roasters in Kenya today
Problem of gaining shelf space in supermarkets anissue
Stiff competition likely from established brands
8/9/2019 The Coffee Sector Presentation - Kenya
21/28
21
Kenya Coffee Exports Destinations Kenya coffee classified with Colombian milds
Is facing stiff competition from similar coffees of otherorigins
Destinations
Germany
Belgium/Lux
Austria
Switzerland
Nordic Canada
U.S.A
Japan
8/9/2019 The Coffee Sector Presentation - Kenya
22/28
22
Fig a: Kenya Exports by cou
German
35%
Swede
8%
Belgium/Lu7%
Netherland
7%
UK
7%
Finlan
4%
Saudi Arabi
4%
US A
7%
Franc
2%
Italy
2%
Other
17%
Kenya Exports by country
8/9/2019 The Coffee Sector Presentation - Kenya
23/28
8/9/2019 The Coffee Sector Presentation - Kenya
24/28
24
Roasting Green Beans at the place ofconsumption
Fig C: Specialty Coffee Value chai
Retailer
33%
Roaster
54%
Importer
2%
Growers
7%
Exporter
1%
Co-op.
2%
Marketing A./Millers
Levies
1%
8/9/2019 The Coffee Sector Presentation - Kenya
25/28
25
U.S.A MARKET Americas (USA &Brazil) highest consumers of coffee.
Fig d: Global Coffee C onsum ptio
Centra l & Eas t
Europe
8%
As ia & Pac i
14%
Afr ica & Mid
Eas t
7%
Amer ica
3 8%
W este rn Euro
33%
8/9/2019 The Coffee Sector Presentation - Kenya
26/28
26
THE SPECIALTY/GOURMET MARKETSEGMENT Fastest growing market segment in U.S.A
U.S market countries to dominate specialty sales, courtesy ofS.C.A.A efforts.
International Trade Center segments the specialty coffees into
three categories:- Exemplary quality High quality/premium brands Mainstream qualities
SCAA efforts to establish standards for certification of coffeeacknowledged.
8/9/2019 The Coffee Sector Presentation - Kenya
27/28
27
POLICY SHIFT Coffee Board of Kenya regulatory role while marketing
function is privatised.
Inclusion of direct sales parallel to central auction
Operationalization of coffee development fund Government allocation of Ksh. 500 million in current
budget
Encouragement of private investment in value addition
Facilitation of joint ventures or partnerships with roastersand buyers
8/9/2019 The Coffee Sector Presentation - Kenya
28/28
28
CONCLUSION Introduction of second window (Direct Sales) a good
opportunity for investors
Traceability of their product.
Relationship marketing (joint ventures/partnerships)
with producers Branding (Geographical indications Gis/Appellations)
- E N D -
Top Related