Kenya 2010/11 coffee export earnings seen higher

By Mark Denge

NAIROBI (Reuters) - Kenya expects its coffee export earnings to rise by 5-10 percent in the 2010/11 season thanks to good prices and improved output, the ministry of agriculture's top official said on Tuesday.

Statistics from industry regulator Coffee Board of Kenya showed east Africa's biggest economy earned 16 billion Kenyan shillings from the 2009/10 (Oct-Sept) coffee season, a 50 percent jump from the previous year.

This was despite a drop in output to 40,000 tonnes due to bad weather from 54,000 tonnes in the 2008/09 season, when the industry earned 10.7 billion shillings.

Sales at the Kenyan coffee auction more than doubled in the first quarter of the 2010/2011 crop season, rising 112 percent to $45.73 million.

"Despite the early break in the 2010/11 marketing season we expect earnings to grow by between 5 and 10 percent," Agriculture Ministry Permanent Secretary Romano Kiome told Reuters in an interview.

"Prices have been robust throughout the season and we expect that to reflect in the overall earnings later in the year."

Kenya last month suspended its weekly auction of the commodity following a relentless dip in volumes and crop quality. The auction resumes on June 7. Kenya's coffee marketing season typically breaks around the July-August window.

Kenyan coffee prices have hit records this year -- climbing as high as $1,022 per bag -- because of high prices internationally and a squeeze in the local supply.

YOUNG FARMERS

Kiome said output from the 2010/11 season was expected to be between 12,000 and 15,000 tonnes higher compared to production in the 2009/10 season on improved weather.

"The weather looks promising so far and unless we have any incidences of coffee berry disease towards August then the crop output will be very good. We expect output to grow by between 12,000 and 15,000 tonnes," he said.

Traditionally, coffee volumes at auction surge around March but they peaked earlier this year after the east Africa nation witnessed unusually heavy rains in the first months of last year.

Kiome said a surge in the number of youthful entrepreneurs taking up coffee farming is expected to revamp the industry.

"It is thrilling to see more young farmers moving to take over the coffee farms and injecting fresh ideas and energy. This is certain to drive both quality and output volumes for the good of the industry," he said.

"The good prices being realised globally have made many especially the youth to rethink about coffee as a serious business venture."

The official said government-led reforms were also encouraging more farmers to invest in coffee production.

Most small-scale coffee farmers disillusioned by poor earnings have neglected their coffee trees or chopped them down altogether and taken up dairy farming in frustration at years of hard toil with no returns.

According to new rules, co-operatives can keep only 20 percent of net sales and must pass on the rest to farmers. Growers are also replacing corrupt co-operative officials that siphoned their cash, which is also beginning to bear yields.

(Source: http://af.reuters.com/article/investingNews/idAFJOE7490ET20110510?sp=true)