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The East African : March 24th 2014
8 The EastAfrican NEWS MARCH 22-28,2014 WITH EXPECTED DEFICIT GLOBALLY, EA FARMERS TO MAKE MORE Hope as Brazil drought pushes up coffee prices P≥ices have ≥isen 50pc since Janua≥y, as the global supply sh≥inks By JEFF OTIENO The EastAfrican as the current dry spell in Brazil pushes prices to new highs. According to the International Coffee Organisation (ICO), coffee prices have risen 50 per cent since January as the dry spell in the world’s leading coffee producer continues to cut global supply, setting the stage for a coffee deficit in 2014/15. Brazil’s misfortunes will be E well received by farmers in the region who in recent years have grown increasingly disillusioned over the poor coffee prices, with a sizeable proportion uprooting the bean in favour of horticultural crops like passion fruit and flowers. The projected rise in cof- fee earnings is also expected to give temporary relief to regional countries all of whom are struggling to narrow their current account deficits — the difference between the value of exports and imports. Coffee is one of the key foreign currency earners, topping the chart in Burundi and is among the top five sources of export earnings in Kenya, Uganda, Tanzania and Rwanda. The ICO says the coffee mar- ket registered significant developments last month with prices increasing at a startling rate. The ICO composite daily price has increased from under 100 US cents/lb in November 2013 to a high of 176.37 on March 11 this year, the organisation said. “This rally has been driven by a serious drought in Brazil, with several coffee growing regions centred around Minas Gerais receiving little or no rain in the critical development months of January and February” said ICO. “This has engendered considerable concern around the size of the 2014/15 world coffee crop, which is now likely heading towards a deficit compared with A worker on a coffee farm in Uganda. Picture: File demand.” ICO further said: “However, despite these price increases, it must be kept in mind that coffee prices are currently at roughly the same level as November 2012, and thus still a long way from the highs of 2011. Furthermore, the considerable price volatility exhibited by the market in recent months fails to benefit either coffee growers or consumers.” But tea farmers on the other hand have not been as lucky. The highest price for top grade Kenyan tea fell to $3.50 per kg at this week’s sale from $3.60 per Kg last week, Africa Tea Brokers (ATB) said on Wednesday. Kenya is the leading world ex- However, coffee prices are still a long way from the highs of 2011.” International Coffee Organisation porter of black tea and the cash crop is a major foreign exchange earner. The tea prices have been falling since last year, before gaining slightly in January to trade at an average of $2.70 per kg. Demand was strongest from Pakistan while Afghanistan, Bazaar, Kazakhstan and Egypt were more active in the market than last week. Most of the tea auctioned at the Mombasa auction is from Kenya, but it also offers tea from Uganda, Tanzania, Rwanda, Burundi and other regional producers. Agricultural economists be- lieve such increases in the global market might help revive Kenya’s coffee sector whose produc- GAINS FOR THE REGION The projected rise in coffee earnings is expected to: BENEFIT FOR EA FARMERS: In the recent years, farmers have grown increasingly disillusioned over poor coffee prices; a number have been uprooting the bean in favour of horticultural crops. tion has plummeted from a high of 130,000 tonnes in 1980 to an average of 45,000 today. Currently, it is estimated that about 135,000 hectares of land is under coffee in Kenya, of which about 67 per cent is controlled by cooperatives and a further 33 per cent is managed by estates. News of the rise in global pric- es will be better received in Kenya where the country’s devolved government units are pushing to mill and grade their own coffee. The new system is intended to enable farmers to significantly reduce wastage and increase the quantity of beans graded AA — the world’s best rating — thus putting farmers in a position to get higher prices for their produce. In Nyeri County in central Kenya, which is processing its coffee through Sagana KPCU mill, the Karatina factory has reduced milling losses from OFFER TEMPORARY RELIEF: On current account deficits which regional countries are struggling to narrow. EARN FOREIGN EXCHANGE: Coffee is one of the key foreign currency earners, topping the chart in Burundi, and is among the top five in Kenya, Uganda, Tanzania and Rwanda. 26.23 per cent of coffee supplied to 20 per cent. In grading, coffee milled under the new system has increased percentage of the best grade AA to 36 per cent up from 5.5 per cent when it was milled through brokers. Nairobi Coffee Exchange executive officer, Daniel Mbithi, described the increase in coffee prices as a positive trend for the region, saying it will not only boost revenue for member countries but also for farmers. “Any increase in coffee pric- es is always good for farmers who in most cases experience low prices. We expect it to improve their livelihoods,” said Mr Mbithi. Uganda, like Kenya, has also welcomed the increased prices. Last year, the country announced it had approved the national coffee policy aimed at boosting the industry to produce quality coffee that would attract ast Africa’s coffee farmers are set to earn more this year higher prices on the international market. Increased prices are important for the landlocked country since coffee remains its most important agricultural commodity and the major foreign exchange earner. According to official data, the crop has been contributing an annual average of 20 per cent of Uganda’s total export revenue for the past 10 years. Uganda is Africa’s second-biggest coffee producer after Ethiopia and eighth largest coffee producer in the world. It is also the world’s fourth largest producer of Robusta coffee. The majority of its Robusta exports are to Europe, the US, India and Russia, where coffee prices are currently high. The authorities in Uganda hope the prices will be sustained for a longer period for maximum benefit. The increased coffee prices are also being enjoyed by farmers in Tanzania whose production for May 2012 - April 2013 was estimated at 61,012 metric tonnes. The figure nearly doubled the 32,044 tonnes produced the previous season, according to Tanzania Coffee Board (TCB). TCB notes that the country plans to raise production to 80,000 tonnes by 2016, by planting new trees to take full advantage of high coffee prices whenever they occur. According to National Agri- culture Export Board (NAEB), the Rwandan government had announced draconian measures targeting a 75 per cent increase to generate $60 million from coffee production by the year 2012. Rwanda has also decided to plant 4.3 million new trees as it replaces the old ones to strengthen its market. However, economists are warning that the price increase will only last for a certain period. “High coffee prices are neces- sary to boost coffee farming in East Africa which has undergone major challenges to the extent where farmers in some parts of the region abandoned the crop. However, we should bear in mind that it is temporary,” said Job Seda, an agricultural economist. Additional reporting by Peterson Thiong’o Agency admits pa≥t in poo≥ leade≥ship By FRED OLUOCH Special Correspondent KENYA’S anti-corruption agency has said it had difficulties in sufficiently testing the integrity of all the candidates prior to the March 2013 elections, thus enabling corrupt elements to gain leadership positions. Speaking at the launch of the Eth- ics and Anti-Corruption Commission (EACC) Strategic Plan 2013-2018 on Tuesday, chief executive Halakhe Waqo, said that the agency had to deal with the demands of a new set of laws that it was applying while trying to beat the deadline for the elections. “Kenyans were jostling to see change. In the process we may have overlooked a few things. But in the future, we will not have any excuses to give to Kenyans,” Mr Waqo said, adding that they were working on regulations to implement the Leadership and Integrity laws. Mr Waqo assured Kenyans that un- like before when the war against corruption was reactive and was confined to investigations and prosecutions, the new approach is pro-active and preventive, laying emphasis on public education and participation, while investigations and prosecution will continue. “We are also engaging the leadership on issues of national values, ethics and good governance,” he said.
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