Coffee is one of the world’s most traded commodities, providing livelihoods to around 25,000,000 households. As at 2019, an estimated 800,000 Kenyan farmers – 70% of them smallholders and 30% women – were involved in coffee farming (Coffee Directorate, 2019). Smallholder farmers control about 75% of the total hectares of land under coffee production and contribute 70% of the national annual production of clean coffee beans. This represents 28,000 Metric Tonnes (MT) of the clean coffee produced in 2021. On the other hand, medium and large scale coffee growers own the remaining 25% of coffee farms and contribute 30% of the annual production. The profitability of smallholder farmers and their adaptive capacity is negatively impacted by their lack of access to knowledge and skills on good agricultural practices, and lack of access to things like technology, improved variety seedlings, agro-inputs, and finance.
Between 1990 and 2020, Kenya’s acreage under coffee declined by 30%, from 170,000 to 119,000 hectares. Similarly, production dropped by 70%, from 129,00 to 40,000 Metric Tonnes. The decline has been attributed to weak coffee sector systems, sub-optimal extension services, and low (and fluctuating) global coffee prices against the rising cost of production (agro-inputs, labour) and living. It is important to note that most smallholder farmers own under 2 hectares of land and around 1,000 coffee trees. With this, they can only produce 2 to 3 kilograms of cherry per tree on average. This while there is a potential of over 30 kilograms per tree (KALRO). The low productivity, coupled with low prices further deepen the challenges faced by smallholder farmers and continue to make it difficult to mitigate or adapt to climate change, invest in good practices, access markets and attract competitive prices.
Fertilizers prices at a record high
Over the years, the cost of production of coffee has doubled to an average of Kenya Shillings 80 to 100 per kilogram of clean coffee from the previous cost of Kenya Shillings 39 per kilogram. As a result, net incomes from coffee have decreased significantly for especially smallholder coffee farmers who do not enjoy economies of scale. Top contributing factor is the rising global cost of fertilizer which accounts for up to 16% of the total cost. The US Department of Agriculture has projected that the recent surge in fertilizer prices – by 71% to around Kenya Shillings 5,000 to 7,000 per 50 kilogram bag – will have significant implications on coffee production in the 2022/2023 season. Production (and coffee exports) are forecast to decrease by more than 10% to 670,000 (60 kilograms bags) from 750,000 bags of clean coffee, due to lower production (USDA).
Rising Cost of Labor Coupled with Declining Labor Availability
Costs related to labour take up to 50% of production costs in coffee farming. In recent years, costs related to canopy management – pruning, handling, weeding and manure/pesticide application, coffee picking and sorting – have increased from an average Kenya Shillings 26,000 to Kenya Shilling 30,000 per hectare (Sustain Coffee). This comes against the backdrop of increasing rural-urban migration, low youth participation in farming as a business, adverse impacts of climate change and a push to increase coffee productivity per coffee tree. Given that coffee is a labour-intensive and technical industry, limited access to labour (skilled and unskilled) will continue to pose huge threats to coffee productivity (quality and quantity), profitability and ultimately, the sustainability of the coffee value chain.
A Double Crisis?
The negative impacts of climate change, such as rising temperatures, increased pests and diseases, erratic weather weather events (for example, droughts, floods), pose major threats to the coffee value chain, and disproportionately affects smallholder farmers. The long term effects of climate change such as rising temperatures and decreasing rainfall, have also been linked to a significant reduction of land suitable for coffee production in Kenya. In addition, knowledge gaps and low access to finance, continue to hinder uptake of, and investments in climate-smart agricultural practices, sustainable land management, and climate adaptation practices. As a result, practices such as deforestation caused by land clearing, burning plant biomass, farm establishment in high conservation value areas and riparian land, as well as poor tillage practices and management of waste from coffee processing, are still rampant among smallholder farmers and processors. In 2020, unsustainable production practices led to Kenyan coffee being flagged in Japanese and South Korean markets due to high levels of chemical contamination.
Opportunities to Avert the Looming Crisis
The rising cost of production in coffee farming has, and will continue to, impact farmers’ incomes and ultimately, their ability to invest in good practices and agro-inputs. This and other factors could push more farmers to either switch to other ‘less risky’ commodities and/or revert to unsustainable production practices.
The result? A potential decline in the country’s annual coffee production and profitability for smallholder farmers.
The current challenges present massive opportunities to avert a looming crisis and build a sustainable and inclusive coffee value chain.
How can all stakeholders contribute to this? Firstly, we must prioritize full implementation of the recommendations in the Report of the National Task Force on Coffee Sub-Sector Reforms. To ensure long-term attractiveness of Kenyan coffee in export markets, bold actions and commitments must be taken now! Such actions must take into account the challenges faced by smallholder farmers, critical stakeholders in Kenya’s coffee value chain. These actions include:
- Public sector – Kenya needs to develop and implement an enabling policy environment. Decision-making on policies must be inclusive if we are to address the challenges facing particularly smallholder farmers. Investment in research and development, sustainable extension models, guidelines and standards and new technology must also be prioritized.
- Private Sector – Tailor solutions for smallholder farmers to enhance their productivity (quality and quantity) and profitability. For example by providing credit, climate finance, value addition, digital solutions, etc. Producers should also adopt good agronomic and management practices, value addition, and circular production systems that maximize their productivity and profitability while safeguarding our ecosystems.
- Consumers – Smallholder farmers play a critical role in the transition to sustainable production. However, market demand also places a role in shifting market dynamics. So while farmer contribution to the coffee value presents opportunities for achieving global development (e.g. poverty alleviation, gender equity and a healthier environment), consumers switching to more sustainable consumption patterns could offer incentives to the farmers to change their behaviours and ensure the sustainability of the coffee value chain.
- Market incentives – Buying coffee on terms that incentivize producers who invest in sustainable production practices can transform the industry by ensuring farmers meet the cost of sustainable production and encouraging more farmers to join the movement.