Coffee marketers are optimistic of better earnings in 2011 following sustained strong performance of the commodity prices in key markets around the world since last year.
Prices of premium grades at the first auction sale for this year climbed an average of 16 per cent to about Sh40,000 per 50kg compared to the last sale of 2010.
“It is a very promising year for the sector because the price outlook is bright,” Daniel Mbithi, an official at the weekly auction said.
The performance of prices at the auction are largely reflective of happenings in the global front where prices continued to climb on the effects of supply concerns caused by poor weather in key producer countries such as Brazil.
Data released yesterday by the International Coffee Organisation (ICO) showed that prices of Kenya’s main Arabica coffee variety rose sharply in December, pushing the monthly price indicator to a 16-year-high— signalling good earnings for this year.
“The current supply/demand structure has reinforced the continued firmness in prices throughout 2010. Current developments in market fundamentals suggest that prices will remain firm during 2011,” the organisation said.
The tight supply of coffee to world markets is attributed to adverse weather that is still disrupting harvesting and transportation in many exporting countries.
Disease outbreaks have also put pressure on production levels in some countries.
Colombia was particularly hard hit by coffee leaf rust (CLR) and is not expected to recover soon partly due to the fact that access to treatment is limited by the high cost of inputs.
“World coffee consumption remains relatively buoyant, particularly in emerging countries,” ICO further said.
A newly formed coffee marketer, the Kenya Co-operative Coffee Exporters Ltd (KCCE), however warned that the existence of cartels in the local coffee supply chain has over the years denied farmers the benefits of the expected bonanza.
“This total control has contributed to price manipulation and as a result, small scale coffee farmers have had little reason to invest in higher quality production leading to a vicious cycle of declining earnings and lower yield per hectare,” the managing director, Lucy Murumba said.
A good run in coffee prices has triggered theft and illegal trade in the commodity, with farmers now the main targets of cartels seeking to reap from the boom in earnings.
Market players said though cases of theft and illegal buying and selling of the commodity have been rising since the 2004/05 crop season and coinciding with a firm run in prices, farmers have now become the main targets.
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