Governance problems and falling profits: the decline of coffee farming in Kenya
In Kenya, the coffee culture is going through a difficult time. Farmers face governance issues and falling profits, leading to a drop in production of more than half since the 1990s. Faced with this worrying situation, the Kenyan government recently launched reforms aimed at to revitalize the sector and give small producers a greater share of the profits.
Vice President Rigathi Gachagua announced a bold goal: to quadruple annual coffee production within five years, from the current 50,000 metric tons to 200,000 metric tons. One of the main measures of these reforms is to eliminate middlemen, in order to guarantee better remuneration for farmers.
Gachagua points the finger at multinational trading companies, which he describes as “cartels” and accuses these companies of weighing too heavily on the sector, in particular by influencing prices. The reforms therefore plan to limit the number of licenses that an entity can possess, in order to put an end to monopolistic practices. Many licenses have already been non-renewed, thus impacting trading companies.
However, this conflict between the government and trading companies has harmful consequences on the entire sector. Volumes of coffee sold have been low since the auction reopened in August, as many millers have not had their licenses renewed. They therefore find themselves with a stock of unsold coffee, which puts the farmers in a difficult situation because they are engaged in contracts with these millers.
Trading companies are also concerned about this situation, as there is now a shortage of coffee available for export. Combined with a lack of forecasting, this risks leading to a loss of market share to the competition. It is therefore urgent to find a solution to unblock this impasse.
While the reforms were necessary, several players in the sector regret the lack of consultation and the haste with which they were implemented. They also believe that it would have been relevant to strengthen the capacities of producers, both quantitatively and qualitatively, as well as to help them develop more profitable direct sales networks.
In conclusion, coffee cultivation in Kenya faces major challenges related to governance and profitability. The reforms undertaken by the government are a step in the right direction, but much more needs to be done to revitalize the sector and protect the interests of small producers. The urgency is to find solutions to resolve the situation and allow Kenya to regain its leading position in coffee production.