Agricultural policies

Featured items

Good performance in the EAC’s coffee sector despite depressed global prices

August 14, 2013

In June 2013, the US Department of Agriculture (USDA) published its annual reports on the coffee sectors in Kenya, Tanzania and Uganda. According to USDA, Tanzanian coffee production in marketing year (MY) 2013/14 will reach a record level of 1.2 million 60-kg bags, giving rise to exports of 960,000 bags. This represents more than a doubling of Tanzanian coffee production since MY 2011/12, and an 83.6% increase in total exports over that period. The strongest production growth has been in robusta coffee.

While Japan is the main importer of Tanzanian arabica coffee, Italy is the main importer of robusta coffee, where it is extensively used in espresso coffee. In 2012/13, the importance of the EU market increased to 50.69% of total exports, up from 32.63% in 2011/12, in the context of a 33.5% increase in Tanzanias exports. USDA considers that opportunity exists for Tanzanias specialty coffee market if production and processing are improved.

Tanzania adopted a strategy for the countrys coffee sector 2 years ago. The Tanzanian Coffee Industry Strategy 201121 places particular emphasis on improving the efficiency of the coffee chain, enhancing the marketing of premium coffees (increasing premium coffee sales from 35 to 70% of exports) and diversifying export markets.

In Uganda, arabica coffee production in MY 2013/14 is projected to increase slightly, but will still be almost 20% below production levels in 2011/12, while robusta production is expected to be 21.7% higher than in 2011/12. Total coffee production is projected to be 13% higher than in 2011/12, consolidating production gains made in 2012/13, while export gains will be similarly consolidated, increasing by 13.3%.

Country-to-country trade data drawn from the Global Trade Atlas show that the EU remains the main market for Ugandan coffee, accounting for between 75 and 79% of exports.

Ugandas National Coffee Policy, due for endorsement by parliament, focuses on increasing productivity; restoring and increasing area under coffee; and creating an enabling policy environment.

East African coffee production for marketing years 2011/12 to 2013/14 (60-kg bags)

MY 2011/12 MY 2012/13 MY 2013/14
Kenya
Arabica 817,000 800,000 850,000
Robusta - - -
Total 817,000 800,000 850,000
Tanzania
Arabica 364,000 574,000 650,000
Robusta 193,000 519,000 550,000
Total 557,000 1,093,000 1,200,000
Uganda
Arabica 872,000 650,000 700,000
Robusta 2,230,000 2,700,000 2,800,000
Total 3,102,000 3,350,000 3,500,000

Source: USDA GAIN Reports for Kenya, Tanzania and Uganda, 3 June (see details below)

In Kenya, USDA reports that arabica coffee production is projected to recover from lower levels in 2012/13, taking it to 4% above production in 2011/12, with exports also recovering to 1.6% above 2011/12 levels. Kenya continues to market its coffee primarily through an auction system, but with some direct sales. According to USDA, Kenyas high-quality coffee is in demand for blending with other varieties from other countries. According to reports on the website Agrimoney.com, Kenyan beans have been receiving prices of up to 290 US cents/lb considerably higher than New York arabica futures prices (138.86 cents/lb in mid June 2013).

In 2011/12, 70.1% of Kenyan coffee exports were sold on EU markets. The Coffee Board of Kenya is also in the process of finalising a National Coffee Development strategy. The Kenyan strategy focuses on increasing productivity, developing the domestic market, increasing value addition, promoting the reintroduction of robusta coffee and supporting the growing of coffee in the region west of the Rift Valley.

According to Agrimoney.com, African producers are sheltered somewhat from the international market weaknesses by their low cost of production and government support measures.