Nothing beats a juicy Kenyan coffee with a beautiful blackberry profile. We would even bet that Kenyan coffee ranks in your shortlist with favorites, right? However loved, there is something fundamentally wrong within the coffee industry in Kenya. This is the story of how the Kenyan coffee market is changing for good.
Before you dive into the problems within the market, let’s make a short detour to discover why Kenyan coffees are immensely popular. It’s the iconic flavor profile. Coffee drinkers enjoy the juicy bright flavors that Kenyan coffees bring to the table. The wine under the coffees, so to speak.
Kenya has all the perfect growing conditions. From altitudes, moderate soft temperatures (12° C and 20° C), to rainfalls. And then, there’s Kenya’s position to the equator. It runs through the country placing Kenya at the center of the coffee belt.
As a coffee importer, we are keen on Kenyan coffee. Every season we look for the best-tasting coffees from Kenya. But for three consecutive years, we failed to do so. We could not find a single lot with that iconic Kenyan profile.
75% of all Kenyans are involved in the agricultural sector. A sector that takes up one-third of the Kenyan GDP. Coffee is the third export crop in volume and is vital to the country’s economy. But as the third export crop, it has rapidly lost volume.
The Economist reports that volumes plummeted from 127.000 MT in 1988 to 45.000 MT in recent years. A strong 40% decline. And Reuters reports a 50-year low in coffee output for the season 2019/2020. Today’s production is down to a mere 40.000 MT.
Besides less volume on the market, we saw poor results on the cupping table. Coffee after coffee failed to match our quality standards. We had to disappoint many roasters, like you, because the quality was not there.
Our cupping results and desk-research gave us a rough outline of two problems:
How can the most expensive and high-valued coffee in the world disappear from the market place? We had to get to the bottom of this.
Cuppings and desk research would not give us answers. We had to visit Nyeri, Kenya, to talk with the farmers. We always worked with Kenyan exporters and Cooperatives, so connecting with farmers in Kenya was a first.
Before you dive into the field research, you need to know that 99.63% of Kenyan coffee is grown by 800.000 smallholders. Estates deliver the remaining 0,37%. Based on these facts, the smallholders were likely to give us answers about Kenya’s coffee problem. So, that’s where we started.
Our founder Menno Simons visited Nyeri farmers during several trips. In Menno’s words, Nyeri is the ‘champagne region’ for Kenyan coffee. From April 2018 to January 2019, Menno met the growers of Nyeri first hand to hear their stories. But we needed to structure the investigation. That is why we teamed up with a student and a Kenyan exporter.
Peter approached several Cooperatives with the request to investigate. All declined. But then he met the people of the Nyeri-based Gikanda Cooperative Society Ltd. They were keen to open their doors.
Kenyan Cooperatives act like an umbrella. Under a Cooperative you find several farmer/factory groups. Farmer/factory groups consist of smallholders and washing station personnel. The Cooperative contracts farmer groups to pick and process coffee. The Gikanda Cooperative Society, for instance, worked together with Ndaroini, Kangosho, and Gichathar-ini farmer groups.
The Cooperative board invited Marlies to investigate the Ndaroini group. During the harvest of 2018, Marlies interviewed the Ndaroini members. This was the start of a two-month thorough investigation. During this time, things became interesting. Just a few weeks into her field research, she started to spot patterns in the stories of smallholders.
Marlies reported that smallholders spend endless hours maintaining and harvesting their coffee. But although working hard, farmers couldn’t live from coffee production.
At the end of the season, they receive barely any money to maintain their family’s livelihoods.”
Let’s recap. Volumes are down and quality disappoints. On top of this, we hear reports of smallholders saying they can’t live from coffee production. Unbelievable to hear. Kenyan coffee ranks among the finest in the market, but the farmers can’t make a living income.
While interviewing, two topics surfaced:
In general, smallholders receive 10% of their payment when cherries are delivered at local processing stations. For instance, the Ndaroini factory. This happens in the harvest months of October and November. The remaining 90% is paid in May, or even as late as July.
Before the last 90% is paid, an average of 20% of the net income is deducted by Cooperatives to cover fertilizer/pesticides, finance, and storage costs. This leaves smallholders with a big problem. The payment of school fees, often the highest costs a family makes, must be paid in January.
This forces the smallholder families to take on loans, with up to 23% interest. But this backfires on them, as the interest is too high. Families plunge into a vicious circle of debt. This is not an exception, it’s the rule.
The Ndaroini smallholders say it’s a ‘mission impossible’ to earn a living income. They also can’t invest in their farms to improve yields: the second issue farmers talk about. Kenyan smallholders lack the funds and knowledge to make their quality better.
Through the Ndaroini we hear that they fare on knowledge past down from generations. There is no education and no one to guide their pursuit of quality. And on top of this, the Ndaroini farmers complain that the government offers no support whatsoever.
Let’s remember, coffee trade remains one of the most lucrative businesses in Kenya. But somehow coffee farmers don’t profit.
Low and late payments demotivate farmers. Unseen and unappreciated farmers cause a domino effect. As a result, smallholders turn their backs on coffee farming. We see Kenyan farmers;
You can connect the dots. This is the cause of lower volume output and poor quality on the cupping table. There is not enough great Kenyan coffee because people can’t make a living from coffee production.
The investigation does not end with smallholder prices. If you want to fully understand, you need a clear picture of the entire supply chain: from smallholders to coffee roasters like yourself. Because the answer to underpaid coffee farmers lies in the structure of the supply chain.
Let’s home in on the Ndaroini before the ‘coffee revolution’.
The journey of coffee begins in the backyards of Ndaroini smallholders. Small 0.1 to 0.3. hectares production gardens. Each garden has 200 to 300 coffee trees, primarily of the SL28 variety. The Ndaroini smallholders deliver the cherries to the Ndaroini Coffee Factory for processing.
The ‘Ndaroini Coffee Factory’ is, in essence, a washing station. Here, coffees are pulped, fermented, washed, and dried. The processed coffee will move from the Ndaroini Coffee Factory to a dry mill, where workers sort, husk, grade, and bag to match the different grades.
The dry mill handles the coffee physically but never takes ownership of the coffee. Then, a Marketing Agent, by authorization of Gikanda Cooperative Society and Ndaroini Coffee Ltd., offers and sells the coffee through the Nairobi Coffee Exchange.
The Agent sells to interested buyers who are often Exporters. The Nairobi Coffee Exchange is a weekly auction that is held every Tuesday. After purchasing the coffee on the auction, the Exporter sells the coffee to international buyers, often importers – like Trabocca.
The supply chain structure seems normal. But there is one odd fact.
Four companies in this chain belong to the same multinational. The Dry mill, Marketing Agent, Exporter, and Importer are part of the same group. This gives the multinational power to monopolize prices.
A farmers group like Ndaroini has no influence or negotiation power. The price is set. Today, there is no opportunity for farmers to earn a living income.
In a healthy coffee market, there is more room to negotiate farmgate prices. The market remains dynamic and keeps prices sharp. But in Kenya, large multinationals create an unhealthy distribution of power.
Here, you find the supply chain that pre-dates the Ndaroini’s ‘coffee revolution’. We have highlighted the steps so you can see the influence of multinationals.
In November 2018, Menno started to talk with the board of Ndaroini Coffee Ltd. Together with Peter from Rockbern Coffee, Menno proposed a new alternative supply chain. Instead of the Ksh 60 (Kenyan Shilling) per kilogram, Ksh 100 per kilo cherries was offered.
The 1400-strong farmer group was ecstatic. This new proposal brought hope. To such extent that farmers started to call this ‘the Kenyan coffee revolution’. A higher price gave them perspective for a future in coffee.
In January 2019, we signed the contracts and purchased the entire Ndaroini harvest for Ksh 100 upfront. And an extra Ksh 21 was paid to upgrade and run operations in the Ndaroini Coffee Factory.
So, what is different from the ‘regular supply chains’?
The number of steps is reduced to three: Ndaroini Coffee Ltd., Trabocca/Rockbern, and you.
We are very proud to be involved in Trabocca’s Ndaroini project and are excited by the quality potential we are seeing. We look forward to continuing to work together in the future!”
The Ndaroini coffee revolution does not end with a one-time contract and a high price. Together with Rockbern and Ndaroini, we‘re taking small steps to improve quality and yield. Agronomist, Ph.D., and Dr. Bernard Gichimu is the driving force behind the improvement of quality and volume.
Bernard trains the Ndaroini farmers to produce better quality and a higher yield. He guides the growers with proven practices. From coffee establishment, coffee canopy management, soil fertility best-practices, and disease control.
His training even prevented a significant crop loss among the Ndaroini farmers. “Those who were able to adopt my recommended program did not feel the effect of CBD. They were able to keep the disease at bay.”
The Ndaroini and Trabocca are just two steps in the chain. Coffee roasters bring the ‘coffee revolution’ to consuming countries, in taste and story. As Trabocca, we know that the success of last year’s harvest is due to coffee roasters.
That is why we invite you to join the Ndaroini’s ‘Kenyan coffee revolution’. Simply sign up for our newsletter, and you will know when the new Ndaroini coffees are coming your way. Let’s make coffee better in Kenya.