This archive report was first published on 10 July 2019.
Kenya's coffee farmers are facing a tough time as local prices have plummeted nearly three times in the last six months. The decline is attributed to a growing surplus in the global market.
According to the Nairobi Coffee Exchange (NCE), auction prices fell from an average of $500 (Sh50,500) in January to $200 (Sh20,200) in June this year. The amount of coffee bought during the same period also decreased by more than half, from 68,190 bags in January to 32,821 bags in June.
As a result, overall earnings fell dramatically from $18.5 million (Sh1.8 billion) in January to $3.8 million (Sh383.8 million) in June. This downward trend is linked to oversupply, where global coffee production in the 2018/19 financial year is estimated at 167.75 million bags compared to global consumption of 164.64 million bags.
According to the International Coffee Organisation (ICO), the increase in imports during the first six months of last year indicates ongoing demand growth, but it has not kept pace with the rise in global production in the last two years. The report states, "As a result, there is a surplus of 3.11 million bags in coffee year 2018/19 following a surplus of 3.84 million bags in coffee year 2017/18."
As of May this year, world coffee exports rose by 19.4 per cent to 11.6 million bags compared to May 2018, while exports in the first eight months of coffee year 2018/19 rose by 7.5 per cent to 86.57 million bags.
