Coffee farmers reap big from first direct export to South Korea

Coffee farmers have struck gold with the first direct export of the commodity, setting the stage for unprecedented earnings for smallholders.

A kilogramme of the coffee cherry that was sold directly to a buyer in South Korea fetched Sh116 compared to an average of Sh76 that farmers would have received at the Nairobi coffee auction, which marks a break from the current system that is in the stranglehold of middlemen.

The ground-breaking sale was made by Kipkelion District Co-operative Union (KDCU)—an umbrella of 64 primary coffee cooperatives—which early last month flagged off 134.4 tonnes of coffee beans to South Korean-based company Good Beans.

The consignment will earn the farmers about Sh15.6 million. “This is a historic achievement for small-scale coffee farmers across the country as it is a clear demonstration that given an opportunity and with support, farmers have the potential to rise to the occasion and produce, mill, meet export requirements, negotiate and export our coffee across the entire globe,” said Samuel Marindany, chair of Kipkelion Brokerage Company, which is owned by KDCU.

Mr Marindany was speaking to the co-operative's members at their mill at Fort Tenan, Kericho County. The money will be wired by Good Beans to the Cooperative Bank of Kenya for distribution to farmers.

South Korea is the fourth-largest buyer of Kenyan coffee after Belgium, Germany and the United States.

Its coffee industry is ranked the eleventh largest in the world, with annual consumption of about 512 cups per capita and over 110,000 coffee cafés. It is a lucrative market for Kenya.

Most of Kenya's output is exported by brokers, with farmers getting little from the value chain that has born a booming coffee drinking culture around the World.

Dwindling returns have led to many farmers abandoning the crop, with most of them around Nairobi converting their plantations into housing estates.

Direct selling also means an exporter selling directly to an importer located in another country without relying on intermediaries such as brokers.

There are 9,582 small-scale farmers in KDCU spread in Kericho, Nandi and Bomet counties.

A direct export is a major milestone under President Uhuru Kenyatta’s coffee sub-sector reforms that are aimed at freeing farmers from the chains of predatory brokers.

KDCU in February announced that it would export coffee valued at $908,160 (Sh103.21 million). “I’m pleased to report that the determined efforts from my administration to root out corrupt co-operatives that have been predating on our coffee farmers have borne fruit,” said Mr Kenyatta during the Mashujaa Day address to the nation last year.

He said the surgery he had launched against cartels in the sub-sector had started bearing fruit, with farmers getting better returns for their produce.

KDCU said the direct sale fetches a higher premium for farmers, given that selling the same quantity through the Nairobi Coffee Exchange (NCE) would have fetched farmers a maximum of Sh50 per kilo.

Capital Markets Authority has so far licensed five coffee brokerage firms but NCE is yet to allow them access to the auction floor. Coffee earnings increased to Sh10.8 billion in 2020 from Sh10.2 billion in 2019.