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Field Notes : Kenya 2023 – Exploring the Impact of Government Intervention on Kenyan Coffee Trade

 


In November, I was invited to Kenya by the Nyeri International Coffee Expo to help foster direct relationships between coffee producers and buyers. This trip gave me a front row seat to the major changes happening in the Kenyan coffee sector, while also allowing me to hunt for that unique, currant-heavy cup profile that Kenya is famed for at several stations around Nyeri. It’s unusual for me to travel with a group of buyers, but I was intrigued by the fact that I’d be exposed to pretty much the entire Kenyan coffee sector in a single week.



Kenya has everything you need for beautiful specialty coffee. Volcanic soil, access to fresh water, a relatively predictable rainy season, and coffee cherries ripen slowly in moderate temperatures. Like Colombia, Kenya has plenty of micro-climates because the country lies directly on the equator. There are even 1900 m.a.s.l plateaus that, with proper irrigation and the right farming practices, enable mechanical harvesting.


Despite these fertile conditions, most smallholders are impoverished and each coffee tree yields a mere 2 kilos of cherry per season, less than half that of Colombia. What’s wrong with this picture?


As mentioned before, 2023 was a year of major change in the Kenyan coffee trade. In the summer, the government decided to “break up coffee cartels” because of emerging discord in the sector. Cooperatives and producers have long been reporting corruption and mistreatment by people in power.


The coffee trade in Kenya is controlled through permits that allow companies to operate at different steps of the supply chain, such as milling, marketing, farm management, and export. On paper, a company should only operate in one of these steps. However, loopholes have allowed large trading companies to vertically integrate and profiteer. For example, a cooperative might contract a marketing agent to represent their coffee at auction. But these agents might be connected to large multinational traders – so instead of trying to fetch higher prices for the producer, they seek to profit the multinational trader.


The Kenyan coffee sector has been criticized for allowing this to happen. By allowing wealthy intermediaries to trade and profit, small producers have been effectively prevented from making direct sales. For roasters, this has meant easy access to high-quality coffee. But for producers, it’s led to unsustainable and stagnated pricing and a lack of power to change anything. Simply put, it makes no sense for a smallholder to grow coffee. The labor and costs far exceed the possible profits.


In June 2023, during a Coffee Stakeholder Conference, the governor of Embu County, Cecil Mbarire, called out the companies that have dominated the coffee trade through price control and exploitative strategies, calling it a cartel. It was no surprise that known multinational coffee giants were named.


In response, Agriculture Cabinet Secretary, Mithika Linturi, ordered that the licenses of all marketers be revoked, forcing them to reapply. The Nairobi Coffee Exchange (NCE) closed for nearly three months. No coffee was auctioned during that time. At the same time, harvest was due to start, which meant that tons of fresh coffee would soon arrive at the already overstocked NCE auction warehouses.


While the Kenyan coffee industry was in turmoil, the big buyers turned to neighboring countries to replace what they couldn’t source from Kenya. The big boys have no problem playing the waiting game.


To avoid vertical integration, marketing agents we replaced by licensed brokers. Around 90% of the licenced mills are now government affiliated and not necessary capable of handling the incoming volumes. For coffee buyers, this meant having to re-navigate the supply chain to gain access to high-quality coffee. None of this will not make the trade any smoother or prices higher.


From the perspective of transparency and traceability, these are positive and long

overdue changes, as the Kenyan coffee trade has been notoriously opaque. However, these changes have brought serious challenges for farm management, milling, marketing agents, and direct market access. While producers and cooperatives are eagerly anticipating direct sales with overseas roasters, they often don’t realize what’s expected in terms of quality, service, and supply. The learning curve will be steep and probably very long.


Criticism of these changes from farmers and cooperatives is getting louder. Deputy President Gachagua is now under pressure to follow through with the promises for reform. But right now, farmers need to gain power over what they produce. They need education and guidance on farming methods, processing, evaluating quality, and understanding the supply chain demands.


Mathira North Farmers Co-operative Society LTD talking about the future


So that’s the context of my trip in November. I was invited as a part of a group of roasters to participate in an origin trip aiming to link producer and buyer. It was intimidating, as it was clear that the organizers and producers had very high expectations. The opening ceremony for the trip was a formal, three-hour-long presentation and celebration of different governmental and non-governmental entities involved in making the trip possible. All the important players – from the Ministry of Agriculture to the deputy mayor of Nyeri County and New KPCU millers – were there. Many of the speakers said that they expected purchasing contracts to be signed by the end of the week, as the trip was to culminate in the cupping of selected lots produced by the stations and estates we would visit. To make things even more uncomfortable, all of this was done in front of the producers.


Producer leaving the Thunguri Factory


Our schedule for visiting factories was tight. Over two days, I visited 12 factories and estates. Rather little coffee was coming in at this point of the harvest, so it was mainly about meeting the staff and managers and learning about the infrastructure and production protocols. Most of the stations were quite basic, with uncovered raised beds, old disc pulpers, and heavily worn fermentation tanks. It’s not to say good coffee could not be produced with simple tools, but for me it looked like either there’s no money to make improvements or it trickles somewhere else.


I was very surprised that every station was now processing naturals. Many were also experimenting with controlled fermentation. They told us that this change was because of the expected demand from roasters. While the fermentation frenzy at the consuming end seems to be spreading everywhere, the know-how and market access are often missing.


The early timing of the trip also made it hard to understand how the stations operated during peak harvest.

Drying cherry covered with tarp


Very few workers attended to the coffee on the drying tables. The coffee often remained covered with a heavy tarp even when the sun was out and sometimes was not covered during a strong afternoon shower. The parchment was often cracked – a sign of heavy sun exposure – and mold was a common sight in the naturals. We did not see arriving coffee floated at any of the stations and cherry selection left a lot of room for improvement.


There were some exceptions. In a few stations and estates we visited, the management was implementing improvements and supervising protocols. Some had put up or were building solar dryers, some were doing shade-drying. A few cooperatives had purchased new eco-pulpers and some even had mechanical driers.


A few estates were efficiently separating varieties or had put in irrigation to fight erratic weather patterns. Some fed the coffee plants with organic fertilizer. Kenya isn’t the place for organic coffee, but as the Batian and less complex Ruiru 11 are becoming more common varieties (replacing the suffering SL varieties), plant disease tolerance is improving, which is helping to reduce spraying of chemicals.


At some stations, farmers asked us how much are we going to pay for their coffee. The asking price of the unsorted “direct trade” coffee was somewhere around 12-14$/kg. To put this in perspective, the coffee they were talking about is unsorted green coffee in 50kg jute bags. This is how coffee is normally transported from the mill to the auction and it’s up to the exporter to decide how to sort and pack the coffee after purchasing it. Someone had clearly shown the producers the importers’ offer lists where Kenyan high grades are in that price category. We explained that there are multiple important steps between the parchment from the station and what roasters receive in Europe. I felt bad for the farmers standing at the station next to piles of underripe cherry. Someone had promised them something unrealistic.


Sorting the days pickings


The trip culminated in a cupping at Dedan Kimathi University in Nyeri. A hundred or so references were selected to represent the best that Nyeri (during very early harvest) had to offer. Sadly, the cups left a lot to be desired. Save for one or two well-structured cups, my hopes for that intense cup profile redolent of florals and blackcurrant were dashed. As expected, among the naturally processed coffees, many had major processing problems. Only one or two cups scored above 86 points.


Unsurprisingly, few contracts were made that week. In fact, just one roaster ended up contracting for six bags of coffee. This must have been disappointing for many of the producers, who had been made to believe that coffee is normally traded like this and they could expect to get big contracts for high prices. I felt deeply uncomfortable about this, especially because the farmers’ hopes had been raised so high – a result of the political power play and promises made throughout that year.


Coffee producers in Kenya generally have limited to no knowledge of how coffee quality is assessed or buying decisions made. This is the result of decades of misinformation, with industry power players keeping farmers in the dark about what happens with the coffee they send to factories and the NCE. Nowadays, smartphones with internet access are available even in remote production areas. This allows farmers to follow their coffee all the way to roasters, to see how much roasters are charging. It’s always a shock – understandably so. The distribution of value is often totally ridiculous and unsustainable. What producers often fail to understand is the complexity of the supply chain and the costs added at every step.


Coffee Berry Disease is a big problem in Kenya


Producing specialty-grade coffee is very difficult. Even small inconsistencies at the farm level can result in deteriorating quality. In the specialty coffee trade, this means that the roaster doesn’t necessarily have a market for that coffee. Coffee is very much still a colonial trade product, where a distant “other” creates a product consumed primarily in the Global North. Kenya is a sad example of this – Kenyans have never really had control over their coffee, which is the 3rd most exported product in the country. Ironically, about 75% of this coffee is produced by smallholders, who are often the most exploited and misinformed part of the supply chain.


I tried to explain to the producers I talked with that we needed to wait until the coffee from the main harvest was ready for evaluation. Many of us roasters needed time to navigate how and by whom the coffee would be milled and whose logistics services to use. While marketers used to “represent” farmers at the auction, private coffee consultants are now filling that role. But it takes time to find somebody to fill that important role. It is also not something we do lightly. This person is our link to the farmer. They often take care of pre-shipment samples and other immensely important stuff.


Still, I managed to make the connections I was hoping to make. There are places and people we will absolutely visit again. Hopefully, we can establish a fruitful partnership – even already this season.

Coffee tree planting day at Sakami Estate


At the end of the week, I said my goodbyes to the group and headed to western Kenya. I hopped on a Skywards morning flight with a mind to explore coffee production outside the famous central Kenyan region. I had the pleasure to travel with Eric Wright, who has been the producer of our Rwandan coffees since 2019.


After a night in Nairobi, we sought out Sakami Estate. The estate is situated in Kitale, a small village in the shadow of Mount Elgon and a stone’s throw away from the Ugandan border. At the village's small airstrip, we were met by Gloria Gummerus, who runs Sakami along with her husband Jarmo, a fellow Finn. She drove us weary travellers out to the estate, where Jarmo was waiting with a breakfast of cured salmon. Sauna and salmon soup were scheduled for the evening. Sometimes the expected happens where you least expect it.


Gloria and Jarmo have organized their estate well. Instead of depending completely on the coffee harvest, they’ve planted macadamia, which shades the coffee trees, along with acres of avocado (which were already yielding well during our visit). They calculate production averages as well as the true cost of production. They make sure to feed trees and soil and separate the coffee varieties by sector. They have an organized wet mill in operation and are planning a dry mill. Gloria has organized a group of local women producers, each of whom processes and markets their coffee independently. Sakami Estate produces around a container’s worth of Ruiru 11, Batian, and SL-28.


Gloria is a passionate producer who has seen many sides of the Kenyan coffee industry. She’s also on the board of the new government-affiliated dry milling facility KPCU. During my visit, Gloria, Eric, and I did a few fermentation experiments and talked a lot about what the trade looks like from the perspective of a more established estate producer. In Gloria’s opinion, the old system – where multinationals offered a whole host of services such as milling and farm management – had its benefits. She mentioned receiving threats to tamper with her coffee after getting into a quality dispute with an independent miller she had used in the past.


Sakami Estate is a very different kind of coffee producer than the Kenyan market is used to, resembling more established Colombian or Central American farms that understand the economics of coffee production. Talking with Gloria and Jarmo made me realize how different perspectives of the trade can be depending on how much control an estate has over their coffee. Having control over production, processing, and export allows an estate to price the coffee in a way that is sensible for them. Value can be added by diversifying processing methods and varieties. If the dry mill plan goes through, Sakami Estate will be an independent coffee producer with complete control over the supply and value chain. When a producer like this has solid market access, that’s when I feel that specialty coffee has happened.


Kenyan smallholders own just 0.2 to 3 hectares of land but together are in charge of nearly 99% of the coffee produced in the country. A smallholder working together with a cooperative will be paid when the coffee cherry is delivered to the coffee factory, often a wet mill. Only in 2023 did the government set a minimum price at 80 Kenyan shillings, or roughly €0.45 per kg. Before this, the average was 40–60 shillings or lower. Assuming no additional sales bonus during export, the farmer has to cover both investments in production and their own livelihood with this income. Corruption and theft are also common. Often, cooperatives and producers have disputes over the delivered cherry volume and quality. Even a well-functioning cooperative still has to pay for marketing services as well as fertilizer, pesticides, and other necessary investments, leaving very little profit from coffee production. On top of this, the farms get paid only after the coffee is sold or exported, which can be months after the harvest.


There doesn’t seem to be any incentive for a farmer to deliver a good cherry. Honestly, what do they have to gain?

Gathaiti-ini Coffee Factory


I’m not surprised by claims that Kenyan coffee production has plummeted over the past few years. Many roasters claim that the same has happened to cup quality.


The Kenyan coffee trade appears to be at a crossroads between stagnation and gradual improvement. If the government does not implement the reforms it has planned, we can probably expect an eventual slide back into the old cartel system. We’ll be back at square one.


Thankfully, these reforms are happening. After my visit, the government disbursed 6 billion shillings to boost the Coffee Cherry Advance Revolving Fund. This was done to ensure a “guaranteed minimum return” of 80 shillings per kg of coffee cherry. The government has declared a goal of reaching 100,000 metric tons of exports by 2025 instead of the current 51,000 metric tons. Access to credit from the Agricultural Financing Corporation has also quintupled from 2 to 10 million shillings.


Phyllis Nganga from Origin Connect Services introducing Ziwa farm


Paying more for coffee throughout the supply chain will make producing it a more attractive livelihood. This will improve yields and increase export volumes, as the government is projecting. The large multinational coffee companies that previously dominated farm management services have less to gain from the current regulation.


But, as I said before, there are still numerous quality challenges at the level of the factory and post-harvest services that need to be resolved. Time will tell who will take responsibility for improving quality. The Kenyan coffee industry is full of extremely talented people with decades of industry experience. But they need government backing to keep themselves motivated to produce the best quality cup they can.


For me and Populus, this trip was an invaluable experience. I learned so much about the realities of the Kenyan coffee trade. Of course, I can’t claim to know how the industry works exactly or the dynamics underlying it. What you hear about that reality is colored by experience and by context – you need a second and even a third opinion to get a clear picture. I just wanted to express what I felt and what I heard during my second visit to this incredible country. I am profoundly happy and proud to have met who I did.


I hope that these connections can enrich what Populus can offer – not just high-quality cups of coffee, but strong and meaningful relationships with the producers we partner with.

For many coffee professionals of my generation, Kenyan coffee has been a gateway to what specialty coffee tastes like. I hope that Populus can offer the same experience for our community in the years to come.



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