Kenya sees 2011/12 coffee crop up 6 pct y/y

NAIROBI (Reuters) – Kenya’s coffee output is seen rising 6 percent in the 2011/12 (Oct-Sept) crop year to 54,000 tonnes as farmers make additional investment in existing farms and expand to new areas to take advantage of favourable prices, the industry regulator said on Monday.

Loise Njeru, managing director of the state-run Coffee Board of Kenya, said that the crop earned the country around 26 billion shillings in 2010/11, up from 16 billion shillings a year before.

“During the year which ended, our forecast was 51,000 tonnes and we are convinced we got there,” Njeru told Reuters in an interview.

“For 2011/12, we are forecasting 54,000 tonnes. Fundamentally the performance of the year has been good in terms of earnings and we are seeing a lot of reinvestment into coffee in terms of inputs. So that is expected to spur production.”

Kenya is a relatively small grower but its specialty beans are famous for their high quality and are much sought after for blending with coffee from other producers.

Data from the Nairobi Coffee Exchange showed last week that the auction handled coffee worth $221.7 million, up from $171.35 million the previous year. It handled 33,680 tonnes, compared with 36,197 tonnes in 2009/10, while the average price rose to $329.12 per 50-kg bag from $236.69.

Njeru said the weakening shilling was a double-edged sword for farmers, lifting their dollar-denominated earnings, but they also took a hit from imports like fertiliser.

Although the shilling is off an all-time low of 107 hit on October 11, it still is much weaker than levels it traded at last year.

“It’s a paradox, because on one side the farmers have been very happy with what has come through. We are anticipating we should have made well over 25, 26 billion shillings from coffee,” she said, adding that they expected a similar performance in 2011/12.

“Then on the other side, they go to the same shops everybody is going to. So they have to pay more for their fertiliser, they have to pay more for energy costs for processing and it’s a catch-22.”

Coffee exports were at one time Kenya’s leading foreign exchange earner, but mismanagement in the sector reduced output from a record 130,000 tonnes in 1987/88.

The coffee sector has also in recent years come under pressure from real estate developers who have bought land once set aside for production of the beans.

Njeru said the conversion to real estate meant some coffee estates in central Kenya – reputed to produce among the best beans – were producing less and their expertise was also being lost.

However, the board is seeking new areas in the country, especially in the west of the Rift Valley to promote coffee growing.

“We do know the best quality coffee comes from the central highlands; the soils and the climatic conditions, but also years of expertise in doing it. So we are seeing all that going off and giving way to real estate,” Njeru said.

“But we have a strategy of expanding coffee production to the west of the Rift. If you look at the materials coming from the research station, the bulk of them they end up on the western region, starting from West Pokot to Trans Nzoia, Bungoma and greater Kericho district.”

Njeru said that change in weather patterns — like off-season rains were affecting the flowering process and hurting bean quality and output — creating concerns about the industry.

“It’s really messed us up in the industry because when we get the off-season rains, you find our coffee flowering at very awkward times,” she said.

“Over the years you may have several flowerings which don’t add up to (what you get) if you had a good season of rainfall which triggers a good flowering,” she said.

“That has been a problem, and especially when it comes disease management. Because the disease management has a programme which is tailored to the weather.”

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