Forum warns of dim future for coffee in Africa

The future of coffee production in Africa appears grim, as farmers have to contend with low world prices, long value chains, exploitative intermediaries and limited access to credit.

These were some of the sentiments expressed by stakeholders from across Africa at a high level week-long meeting of policymakers and business leaders in Mombasa dubbed the region’s Coffee Business Forum.

Farmer exploitation by middlemen and co-operatives was cited as one of the major impediments to developing the sector.

“The long value chain is the main problem in the coffee industry where there are more than 16 intermediaries. We intend to reduce them significantly in order for the farmer realise some benefit. We see a dim future if we do not address the issue and entice more youth to be incorporated in the sector,” African Coffee Association executive director Samuel Kamau said.

He said the association will set up a mechanism to ensure that funds set aside by governments to the sector reach farmers. This can be achieved by re-evaluating the role of co-operative societies.

Key themes addressed included the removal of coffee trade barriers by turning the spotlight on the World Trade Organisation’s Trade Facilitation Agreement; innovative mechanisms to facilitate access to credit, buyer and investor priorities globally and how regional growers and traders can capitalise on these new opportunities.

Kenneth Bagamuhunda, director general for Customs and Trade at the EAC Secretariat said coffee is an important global commodity, and one in which the EAC could and should be extremely competitive.

PACKAGING AND BRANDING

He said earnings from coffee exports represent a significant share of the revenues of the EAC, with the average share of coffee in total merchandise exports exceeding 20 per cent.

“Increasing coffee exports from Burundi, Kenya, Uganda, Rwanda and Tanzania could have a considerable positive impact on EAC’s economic development. This impact can only be achieved if some challenges such as the existing trade barriers and limited access to finance are overcome,” said Mr Bagamuhunda.

“Moreover, factors such as quality compliance, value addition, packaging and branding are critical in determining market access and incomes that accrue to the exporting countries and enterprises.”

In May last year, the Kenya government put up a $100 million fertiliser kitty to help revive the ailing coffee sector but farmers have complained of not receiving adequate fertiliser despite these funds being available.

The executive director of International Trade Centre, Dorothy Tembo, said the Market Access Upgrade Programme (Markup) initiative has contributed to growth of the coffee industry in the EAC through helping small businesses address many of the barriers to market that they face.

She said the three-day EAC Coffee Business Forum will also address issues such as access to finance, meeting quality standards and marketing and branding that will help these small and micro-enterprises move up the value chain and increase their competitiveness; including highlighting the potential for greater intraregional and cross-border trade such as to the EU market.

EU member countries including Germany, Italy, Belgium, Sweden and Spain are among the top 10 buyers of coffee from the region.

WHAT’S NEW

During the forum, a special coffee cupping session and a first of its kind online mini-auction offered the participants opportunity to taste and buy coffee from Burundi, Kenya, Rwanda, Uganda and Tanzania and international buyers to bid and purchase through the online facility.

According to the International Trade Centre TradeMap, the EAC earned close to $1 billion from coffee exports in 2018, an increase of seven per cent from 2014.