Kenya’s Earnings from Coffee Exports Up by Over 11% Despite Lower Export Volumes

Published 2022년 2월 15일

Lower coffee production in 2021 due to adverse weather conditions has impacted Kenya’s ability to export. The volume of coffee exports recorded a YoY decline of 17% in the first 11 months of 2021, nevertheless, earnings from coffee exports rose. Limited global coffee supplies resulted in higher coffee prices in the global market, leading to increased returns from coffee exports. According to the New York Exchange, in 2021, coffee prices recorded a seven-year price high, trading at USD 1.70 per pound, a YoY increase of 11.5% over 2020.

According to the International Coffee Organization (ICO), Kenya produces an average of 800 thousand bags of coffee per year, making it the fifth-largest producer of coffee in Africa. With regards to coffee production volume, Kenya stands right behind Ethiopia, the largest coffee producer in Africa with an average annual production volume of 7.38 million bags. Kenya’s coffee production quantities are followed by Uganda (5.62 million bags), Ivory Coast (1.78 million bags), and Tanzania (913 thousand bags). Even though Kenya accounts for less than 1% of the global coffee crop, the country offers very high-quality arabica beans making them a popular choice among coffee processors to blend with other varieties. Kenyan coffee beans are well in demand amongst coffee enthusiasts who enjoy the strong Kenyan blend.

The year 2021 marked the second consecutive year in which Kenya’s coffee production fell. According to Kenya’s meteorological department, the country experienced late-onset and poor distribution of rains during the last two months of Q1. The unexpectedly intense rains negatively impacted the agricultural sector as a whole and coffee production in particular. In addition, the Business Daily highlighted that in the last few years, many coffee farms were converted to harvest lucrative crops like avocado and macadamia, contributing to the reduction of coffee production volumes.

With lower crop production in 2021, the volume of exports fell by over 17%, severely impacting Kenya’s ability to export coffee. As per the data released by the Kenya National Bureau of Statistics, the country exported about 35,000 mt of coffee between January and November 2021 a YoY decline from the 41,000 mt of coffee exported in 2020. Interestingly, the country’s coffee exports earned USD 213 million in value from coffee exports during the same period, surpassing the aggregate earnings of 2020 which stood at USD 196 million. In short, even though the export volumes fell, the earnings from coffee exports rose due to higher coffee prices in the global market.

Lower production in the world’s leading coffee grower, Brazil, has given the coffee producers in Kenya and across the world a reason to smile. The volume of coffee production has fallen resulting in limited global coffee supplies and increasing global prices. According to the New York Exchange, a benchmark used for all world prices, in 2021, a seven-year price high was recorded to trade at USD 1.70 per pound, a YoY increase of 11.5% over 2020. As per East African, prices of Kenya’s coffee, in particular, ranged from USD 4 to USD 6.3 per pound during 2021’s trading period, up from USD 2.5 to USD 5.9 per pound in 2020.

USDA projections show that Kenya’s coffee production is likely to increase from 700 to 750 thousand bags by the end of the marketing year (MY) 2021/22 (October 2021 - September 2020). Higher production is anticipated due to good weather and better crop husbandry practices in response to higher prices. Furthermore, USDA is anticipating that in 2022, Kenya’s coffee production cycle will be in a high-producing period and it is expected to be a cyclical peak production year. Higher production levels are expected to drive the export volume by 3% and increase the earnings from coffee even more if similar price trends continue in the global market.