East African Community Region Coffee Report

An Expert's View about Agriculture and Animal Husbandry in Kenya

Posted on: 3 Jun 2012

Arabica coffee farmers in the East African Community (EAC) region have invested to replace old coffee bushes with new, higher-yielding, more disease-resistant varieties.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 5/24/2012 GAIN Report Number: Kenya Post: Nairobi East African Community Region Coffee Report Report Categories: Coffee Approved By: Stephen Hammond Prepared By: FAS/Nairobi Staff Report Highlights: As a result of recent record high coffee prices, Arabica coffee farmers in the East African Community (EAC) region have invested to replace old coffee bushes with new, higher-yielding, more disease- resistant varieties that will keep them competitive in the world coffee market for years to come. EAC Robusta coffee producers too have enjoyed record prices recently but they may not have so heavily reinvested, because, while prices have been historically high, they aren’t high enough to permit extensive reinvestment in the Robusta sector. Executive Summary: International coffee interests have encouraged EAC Member State coffee Governments, coffee farmers and traders to focus greater attention to the production of specialty coffees for U.S., European and Japanese markets. As examples, the Governments of Rwanda and Burundi are liberalizing coffee production, washing station ownership and permitting direct trades; private voluntary organization (PVOs) have increased efforts to inform and organize coffee producers; and, world coffee buyers have promoted and paid premium prices for high-quality specialty coffee. On the complete opposite side of the world coffee market, where “specialty” remains a foreign concept, Ugandan and Tanzanian Robusta coffee farmers produce approximately 40 percent of Africa’s Robusta exports and about six percent of the world’s Robusta coffee production. All of the EAC’s Robusta coffee farmers are small-scale producers who rely on intercropping Robusta trees with food crops to provide food to sustain their families and the chance for a meager cash return from the ancillary Robusta-coffee production. This report contains PSD tables for all EAC Member States: Kenya, Tanzania, Uganda, Rwanda and Burundi. FAS/Nairobi staff has also recently published individual annual coffee reports, analyzing the Arabica and Robusta coffee production, supply and distribution in Kenya, Tanzania and Uganda (please follow the same link used to access this report). This report reflects the analysis and opinions of the FAS/Nairobi Office of Agricultural Affairs and does not necessarily represent the views or opinions of the U.S. Department of Agriculture in Washington, D.C. Production: EAC EAC Coffee S&D 2009 2010 2011 2012 2013 Beginning Stocks (1000 60 KG BAGS) 1,347 1,410 911 864 982 Arabica Production (1000 60 KG BAGS) 2,975 2,280 2,589 2,537 2,900 Robusta Production (1000 60 KG BAGS) 3,114 2,254 3,018 3,050 3,100 Total Production (1000 60 KG BAGS) 6,089 4,534 5,607 5,587 6,000 Soluble Imports (1000 60 KG BAGS) 0 0 0 0 0 Total Imports (1000 60 KG BAGS) 0 0 0 0 0 Total Supply (1000 60 KG BAGS) 7,436 5,944 6,518 6,451 6,982 Bean Exports (1000 60 KG BAGS) 5,807 4,804 5,414 5,225 5,850 Soluble Exports (1000 60 KG BAGS) 1 1 2 1 1 Total Exports (1000 60 KG BAGS) 5,808 4,805 5,416 5,226 5,851 Rst,Ground Dom. Consum (1000 60 KG BAGS) 218 228 238 243 243 Soluble Dom. Cons. (1000 60 KG BAGS) 0 0 0 0 0 Domestic Use (1000 60 KG BAGS) 218 228 238 243 243 Ending Stocks (1000 60 KG BAGS) 1,410 911 864 982 888 Total Distribution (1000 60 KG BAGS) 7,436 5,944 6,518 6,451 6,982 Revised EAC Member State Coffee Board estimates and FAS/Nairobi estimates and forecasts World Robusta Coffee Production (Thousand 60 Kg Bags) MY Africa EAC* % Africa* Total % World* 2001 10,789 3,028 28.1% 43,624 6.9% 2002 8,279 3,041 36.7% 40,685 7.5% 2003 8,177 2,628 32.1% 41,158 6.4% 2004 7,430 2,377 32.0% 42,628 5.6% 2005 6,629 2,555 38.5% 39,819 6.4% 2006 6,209 1,700 27.4% 42,144 4.0% 2007 7,170 2,654 37.0% 47,447 5.6% 2008 7,529 3,240 43.0% 43,256 7.5% 2009 8,056 3,114 38.7% 49,454 6.3% 2010 6,683 2,254 33.7% 50,009 4.5% 2011 6,006 3,018 50.2% 48,993 6.2% 2012 7,385 3,050 41.3% 47,809 6.4% Source: ICO *FAS estimates Kenya Kenyan Coffee PSC--FAS/Nairobi 2009 2010 2011 2012 2013 Beginning Stocks (1000 60 KG BAGS) 270 140 50 26 31 Arabica Production (1000 60 KG BAGS) 900 700 680 780 850 Robusta Production (1000 60 KG BAGS) 0 0 0 0 0 Total Production (1000 60 KG BAGS) 900 700 680 780 850 Soluble Imports (1000 60 KG BAGS) 0 0 0 0 0 Total Imports (1000 60 KG BAGS) 0 0 0 0 0 Total Supply (1000 60 KG BAGS) 1,170 840 730 806 881 Bean Exports (1000 60 KG BAGS) 980 740 654 725 800 Total Exports (1000 60 KG BAGS) 980 740 654 725 800 Rst,Ground Dom. Consum (1000 60 KG BAGS) 50 50 50 50 50 Soluble Dom. Cons. (1000 60 KG BAGS) 0 0 0 0 0 Domestic Use (1000 60 KG BAGS) 50 50 50 50 50 Ending Stocks (1000 60 KG BAGS) 140 50 26 31 31 Total Distribution (1000 60 KG BAGS) 1,170 840 730 806 881 Revised Coffee Board of Kenya estimates and FAS/Nairobi estimates and forecasts Tanzania Tanzania Coffee--FAS/Nairobi 2009 2010 2011 2012 2013 Beginning Stocks (1000 60 KG BAGS) 362 279 39 49 153 Arabica Production (1000 60 KG BAGS) 644 392 600 640 700 Robusta Production (1000 60 KG BAGS) 504 202 450 350 300 Total Production (1000 60 KG BAGS) 1,148 594 1,050 990 1,000 Total Supply (1000 60 KG BAGS) 1,510 873 1,089 1,039 1,153 Bean Exports (1000 60 KG BAGS) 1,200 803 1,008 850 950 Soluble Exports (1000 60 KG BAGS) 1 1 2 1 1 Total Exports (1000 60 KG BAGS) 1,201 804 1,010 851 951 Rst,Ground Dom. Consum (1000 60 KG BAGS) 30 30 30 35 35 Soluble Dom. Cons. (1000 60 KG BAGS) 0 0 0 0 0 Domestic Use (1000 60 KG BAGS) 30 30 30 35 35 Ending Stocks (1000 60 KG BAGS) 279 39 49 153 167 Total Distribution (1000 60 KG BAGS) 1,510 873 1,089 1,039 1,153 Revised Tanzania Coffee Board estimates and FAS/Nairobi estimates and forecasts Uganda Uganda Coffee--FAS/Nairobi 2009 2010 2011 2012 2013 Beginning Stocks (1000 60 KG BAGS) 561 641 701 613 593 Arabica Production (1000 60 KG BAGS) 650 818 644 630 650 Robusta Production (1000 60 KG BAGS) 2,610 2,052 2,568 2,700 2,800 Total Production (1000 60 KG BAGS) 3,260 2,870 3,212 3,330 3,450 Total Supply (1000 60 KG BAGS) 3,821 3,511 3,913 3,943 4,043 Bean Exports (1000 60 KG BAGS) 3,050 2,670 3,150 3,200 3,400 Total Exports (1000 60 KG BAGS) 3,050 2,670 3,150 3,200 3,400 Rst,Ground Dom. Consum (1000 60 KG BAGS) 130 140 150 150 150 Domestic Use (1000 60 KG BAGS) 130 140 150 150 150 Ending Stocks (1000 60 KG BAGS) 641 701 613 593 493 Total Distribution (1000 60 KG BAGS) 3,821 3,511 3,913 3,943 4,043 Revised Uganda Coffee Development Authority estimates and FAS/Nairobi estimates and forecasts Rwanda Rwanda’s coffee stakeholders embarked on a concerted effort to help Rwanda climb from the malaise and neglect rampant during the late 1990s. They have rebuilt and improved Rwandan coffee production and marketing to where Rwanda now has a respected “name” for high-quality specialty coffee. Stakeholders have increased the number of washing stations from two in 2002 to more than 60 today. Production remains highly cyclical and specialty coffee lags well behind the production of “standard” coffee, but coffee producers have, reportedly, taken advantage of recent historically high Arabica coffee prices to replace old, diminishing productivity bushes with higher-yielding and more disease tolerant varieties. The sector will be better prepared to survive the likely world-wide glut of Arabica beans in the coming years. Rwandan producers appear poised to build on their success in the specialty coffee world market. By producing for the specialty coffee market, producers have historically been able to operate within a narrower price band, when compared with New York Commodity Exchange “C” or standard coffee. Rwanda Coffee--FAS/Nairobi 2009 2010 2011 2012 2013 Beginning Stocks (1000 60 KG BAGS) 130 170 121 139 156 Arabica Production (1000 60 KG BAGS) 369 258 316 270 350 Total Production (1000 60 KG BAGS) 369 258 316 270 350 Total Supply (1000 60 KG BAGS) 499 428 437 409 506 Bean Exports (1000 60 KG BAGS) 326 304 295 250 350 Total Exports (1000 60 KG BAGS) 326 304 295 250 350 Rst,Ground Dom. Consum (1000 60 KG BAGS) 3 3 3 3 3 Domestic Use (1000 60 KG BAGS) 3 3 3 3 3 Ending Stocks (1000 60 KG BAGS) 170 121 139 156 153 Total Distribution (1000 60 KG BAGS) 499 428 437 409 506 Revised ICO estimates and FAS/Nairobi estimates and forecasts Burundi Belgian colonists first introduced coffee to Burundi and established a business sector that provided Belgium with coffee and Belgium operators with transaction-related profits. At Burundi’s independence in 1962, the newly formed Government of Burundi (GOB) privatized the coffee industry. Following privatization, the GOB repatriated the industry in 1976 and then re-privatized it in 1991. During the second repatriation period, the GOB invested World-Bank-borrowed money into the coffee sector building washing stations and planting coffee bushes. Reportedly, the GOB added 130 million new coffee seedlings to production and built over 130 washing stations (please note above that Rwanda had two washing stations at this point in history). Today, there are just over 150 washing stations in operation and most are now privately owned. Coffee producers can trade directly with exporters or importers, putting them much closer to the market. In spite of all the domestic political turmoil, including civil war, coffee producers have continued to increase, albeit in a highly cyclical fashion, the quantity and quality of their exports. For MY2013, Burundians will likely be on track to reach the highest export level since MY2006. Burundi Coffee--FAS/Nairobi 2009 2010 2011 2012 2013 Beginning Stocks (1000 60 KG BAGS) 24 180 0 37 49 Arabica Production (1000 60 KG BAGS) 412 112 349 217 350 Total Production (1000 60 KG BAGS) 412 112 349 217 350 Total Supply (1000 60 KG BAGS) 436 292 349 254 399 Bean Exports (1000 60 KG BAGS) 251 287 307 200 350 Total Exports (1000 60 KG BAGS) 251 287 307 200 350 Rst,Ground Dom. Consum (1000 60 KG BAGS) 5 5 5 5 5 Domestic Use (1000 60 KG BAGS) 5 5 5 5 5 Ending Stocks (1000 60 KG BAGS) 180 0 37 49 44 Total Distribution (1000 60 KG BAGS) 436 292 349 254 399 Revised ICO estimates and FAS/Nairobi estimates and forecasts Consumption: Arabica Robusta 400 350 300 250 200 150 100 50 0 Arabica vs. Robusta Coffee Prices $/60 Kg 8 0 2 4 6 8 0 2 9 0 0 0 0 0 1 1 9 0 0 0 0 0 0 0 For general analytical and marketing purposes, citizens within the EAC drink tea. Prices In the EAC coffee export table above, the price differentials between Robusta and Arabica paid at auction are striking. On average during MY2011, Arabica yielded $4.66/60 Kg bag while Robusta averaged just $1.75/60 Kg bag. The price data from the New York Commodities Exchange represented 1 2 2 2 2 2 2 2 in the charts here below corroborates the premium paid for Arabica coffee during the period of the exports noted above. New York Market 80% 70% 60% 50% 40% 30% 20% 10% 0% Robusta Coffee Prices as a percent of Arabica Coffee Prices 8 0 2 4 6 8 0 2 9 0 0 0 0 0 1 1 9 0 0 0 0 0 0 0 1 2 2 2 2 2 2 2 New York Market
Posted: 03 June 2012

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