Thika Coffee Mills and Socfina firms offer milling, processing and marketing services.

Investors are assured of local and export markets with abundantly affordable labor. Investment incentives under Export Processing Zones (EPZs) and Manufacturing under Bond programs and investment guarantees are also available.

Njeru said the coffee industry has made notable achievements, especially by developing better coffee varieties such as Ruiru 11, SL28 and SL34 and the Blue Mountain varieties.

Good Old Days

Kenya’s estimated area under coffee is 170,000 hectares. There are 700,000 small holders marketing their produce mainly through cooperative societies. The country’s annual coffee production stands at about a million bags per year, with earnings standing at about $280 million.

The poor production performance can be attributed to farmer preference for fast-maturing and better-paying crops. “The cost of coffee farming is high and the crop labor intensive compared to other products that are overtaking it such as horticulture,” said Njagi.

The farmers’ bottom line has for years remained poor, with the pay dropping to as low as $0.2 to $0.5 per kilogram of cherry. Many farmers reacted by uprooting their crop. Those who persevered have however benefitted in the past few years, when prices have been on the rise.

Severe devaluation of the shilling in 2011 benefitted farmers as the local currency fell to a low of 107 shillings to the dollar, losing over a quarter of its values that year. It has since recovered to play in the 83-87 range in the last two years.

Farmers also gained from high prices in 2012, but this period was marked by an increase in incidents of coffee theft in factories across Kenya. These thefts further severely discouraged coffee farmers.

Market palyers have asked the government to consider strengthening the auction system and adopt a two-cheque system of payment. They propose locking out marketing agents from receiving farmers’ proceeds, and instead paying directly to farmers and millers.

Kenya has eight marketing agents. They present coffee at auction, prepare the auction catalogues, set reserve prices and select auctioneers.Kenya’s grading system is based on bean size, weight and shape. Bigger-sized beans have better quality, more aroma and high flavor.

A recent quality chain analysis listed disease control and poor access to affordable credit as the major production shortcomings.

Low adoption to disease-resistant varieties by farmers is also a challenge. Farmers attribute this to cash flow disruptions, doubts about both yield and quality performance, and lack of adequate planting materials.

While setting up a processing plant is expensive, fluctuating commodity prices on the world market have often forced farmers to neglect the crop and turn to other produce. This makes supply of fresh produce unsteady as farmers constantly react to global markets.

Coffee farms in Kiambu County neighboring Nairobi have also increasingly given way to real estate development in recent years, thus affecting coffee and general agricultural production as fertile land is turned into commercial use.