Kenya coffee industry crisis is growing! What is the reason?
Some coffee farmers in Kenya said that the Kenyan coffee industry had a golden age with the strong development of the Farmers Cooperative Association. At that time, 42 coffee factories and thousands of farmers produced thousands of kilograms of coffee each year. However, according to reports, the crisis in the Kenyan coffee industry is becoming increasingly serious. What is the reason? Let’s find out with XLIII Coffee!
Poor cooperative management causes crisis in Kenya's coffee industry
According to the survey, the Kenya coffee industry is becoming extremely gloomy. Rich coffee farms in central Kenya have been covered with Napier grass. Many farmers in this area said that farmers are no longer interested in coffee production, possibly due to poor management mechanisms and embezzlement by cooperatives. They constantly lose money, are exploited, and are not paid properly. This causes farmers to lose income and lose confidence in cooperatives. Many farmers decided to leave the cooperative, produce and sell their own coffee to brokers. With no sustaining producers, the cooperative model in the Kiambu region and central Kenya counties collapsed. Some producers had to abandon farms and coffee growing areas were abandoned, leading to a serious decline in Kenya coffee output. Since 1987, coffee production in Kenya has decreased by about 70% to 40,000 tons in 2021.
The Kenyan government's reform policies and their impact
Recently, Vice President Rigathi Gachagua of Kenya is trying to promote the latest coffee reform. But the decisions taken are causing more serious losses to the Kenya coffee industry.
The reform campaign began with the Reform Conference in Meru with a call for entities he called cartels to leave the coffee sector. We want many values to be returned to farmers (avoiding the situation of stealing farmers' efforts, ensuring coffee growers receive 95% of green coffee sales), but how are these policies implemented? This practice causes a lot of confusion for coffee makers in Kenya.
Marketing agents, roasters and coffee exporters are constantly having their operating licenses revoked, and the re-licensing mechanism is unclear, leading to supply chain disruptions, causing losses while the industry has just begun to operate. just recovering. Many manufacturers and roasters said the recall has affected the entire coffee import and export business. In addition, companies that own factories and marketing agencies must be established according to government regulations. It requires that companies can only engage in marketing, milling or exporting if they have a company that specializes in providing that particular service. With current reforms, these companies have lost their licenses and only have to apply for a license for a single service.
As of August, the license revocation issue had affected trading volumes. Coffee factories that have lost their licenses cannot sell the more than 100,000 bags of coffee they have in their stores. In early October, some coffee factories announced they would have to lay off employees because they could not operate. Additionally, the new regulations require cooperatives to take their coffee to the new Kenya Growers Cooperative Union (KPCU) for milling. However, KPCU has not processed large quantities of coffee for many years. Entrusting new KPCU to grind coffee is not recommended because even farmers do not trust new KPCU.
Are crises inevitable?
Some opinions say that the decline in Kenya coffee is due to rising coffee production costs, high tax regimes on inputs, the labor movement regularly increasing wages, ineffective wet coffee processing and lack of Improved coffee varieties are some of the issues that need to be addressed. So, the reforms should have been implemented at the production level. Some other opinions are quite optimistic about reform policies. They hope cooperatives can improve and resolve the embezzlement of farmers' money so they can sell coffee again without fear of capital loss.
With actual data reports after policy implementation, stakeholders can also evaluate performance and feasibility. In the coming time, perhaps the Kenya industry will have significant changes.
Assessed objectively, it is not difficult to see that this crisis is inevitable for the common development process, because transparency and fairness need to be established in every stage of the economic process. However, for the Kenya economy, this is being done and changed quite hastily, lacking uniformity and appropriate strategies. This is definitely not a good thing because many people, including manufacturers and farmers, are affected and suffer significant losses. However, it is certainly not too bad to create transformational steps for the overall sustainable development of the entire industry, ensuring transparency, fairness and returning value to the right people.
As a sustainable-oriented coffee business, XLIII Coffee understands the importance of transparency and fairness in product production and supply. We strive to operate with the principle of promoting fairness, placing ethics, responsibility and optimizing value for customers and the supply chain first. We establish long-term cooperative relationships through direct trade. The value returned always comes with quality, transparency, traceability and high responsibility to the community and balance between economy - society - environment. If you want to experience specialty coffee beans and the profound values of a sustainable coffee supply chain, visit XLIII Coffee.
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