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Kenya: Pre-Harvest Plan 2022-2023

Overview

Our 2022-2023 Kenya Pre-Harvest Plan continues explorations in the West, shifts more support towards small estates, and unveils a new strategy of working with our Kenyan partners to build a pipeline for finding and supporting talented farmers who are interested in producing to the top of their potential for direct export. This is a departure from past efforts, which have centralized around calibrating with our export partner labs to secure selections from the same cooperative partners each year—in short, working through the traditional supply-chain in Kenya.

Sections:

  1. Timing
  2. Background
  3. Expectations
  4. Challenges and Discussion
  5. Key Suppliers
  6. Sourcing Strategy & Supplier Updates
  7. How to Get Involved

Kenya 2022-2023 harvest expectations, at a glance

The harvest in Kenya is coming in a few weeks late and 20% lower than last year. Despite that, we anticipate:


Import volume
will increase over last year with more, smaller lots;

Arrival will be late May-early June,
with peak bookings in March—earlier than last year, despite a delayed harvest;

Qualities will be equal to or slightly higher than last year,
based on agronomic indicators and additional programming aimed at lot selection; and


Prices

will be about the same or slightly lower than last year.

 

Timing

RegionHarvestMillingMarketing/Export
East (Machakos)Aug–SepOct–NovDec–Jan
West (Rift Valley)Oct–DecDec–JanJan–Feb
Central (Aberdare & Mt. Kenya)Nov–JanJan–FebFeb–Mar

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Farmers sorting their cherry for ripeness at a collection center before aggregation and processing

Background

Our first import from Kenya came from the 2015 harvest in the Kiambu region, just north of Nairobi. By that time coffee had been cultivated at commercial scale in Kenya for over 100 years. First introduced by colonizers as a cash crop to pay down debts to the crown related to railroad construction, Kenyan coffee gained world renown for its distinct quality. This reputation, the coffee and systems that produced it, remained in place through Kenya’s independence in 1963, after which smallholder groups supplied coffees in the same way as before, only with control over pulping through regulations aimed at supporting cooperative societies. Yet in most other ways support for smallholders declined, and with it, the importance of coffee to Kenyans in Kenya. 

Since the 1970s, coffee exports in Kenya have declined over 70% as a result of the lack of value associated with coffee production versus other commodities—or the land on which coffee was grown on, as much of the coffeelands in Kenya surrounds the rapidly-expanding capital city of Nairobi. By 2015, as it exists largely today, coffee represented about 1% of Kenya’s GDP, less than 10% of overall agricultural export earnings and roughly one-third of total agricultural labor force. 

And that is because today, the Kenyan coffee industry remains built on the same top-heavy colonial architecture designed for resource exploitation and repatriation of wealth, placing Kenya’s 85,000+ smallholders and 24,000+ estates behind a complicated, layered system in the relationship between a centralized auction, licensed exporters, mandatory marketing agents, integrated dry mills, and politicized farmers unions. While Kenya has some of the best built-in traceability in the coffee producing world, their byzantine export system challenges the way we operate elsewhere — through loyal, calibrated relationships with producers and exporters to enable a direct connection between the premiums we pay, and year-over-year commitments we offer, and impact in producing communities. 

In years past we worked to build equitable relationships along the value stream, a team-based approach that relied on calibrating on the cupping table with export labs, and engaging them to purchase coffees from the same cooperatives year-over-year, following those producer groups as they moved between mills and marketing agents. Since the system in Kenya makes it impossible to work independently and directly, we’d work transparently and consistently; building a bench along the way of the best exporters, mills, cuppers, agronomists, washing station managers, community leaders and farmers we could find. Through these efforts we were able to select the best separations from a year’s worth of cherry collections from certain suppliers. But these small lots conceal an underlying truth about coffee in Kenya: though we use and view these coffees as microlots, they’re part of the greater context built for volume, and not quality or the quality-minded separations we associated with microlots.

This year is different. Recent changes in export regulations allow smaller farmers to pulp their own coffee, and a new generation of farmers are excited at the opportunity. There is a wave of new, young management being voted into boards across the central highlands, and new, small estates are popping up all over the western rift valley. What they have in common is an eye past the temperaments of the auction, and towards what is known as the ‘direct export channel’ where prices are negotiated directly with buyers instead of through mills, marketing agents, auctions and exporters. However, all of the systems and support that these producers have available to them is geared towards volume – not the quality that will help them to bypass the auction. Quality has historically been the domain of marketing agents, those responsible for advising farmers on the value of what they have. Yet from here we see a pathway to working more closely with the growers and processors, involving them in the process of marketing their own coffee for our 2023 import.

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Expectations

An extended drought in Kenya coupled with Coffee Berry Disease in the Central Highlands are expected to reduce overall production by about 20%, disproportionately affecting larger grades. This will increase competition for (and prices of) AA grades, but should not impact our direct export strategy which targets individual groups, including AB grades, PBs, and even 15+ screen sizes. Initial cuppings of AB and PB grades showed quality lagging a quarter to half point lower than AA counterparts, but this is not always the case – there are exceptions to be found by cupping through outturns throughout the season. 

The harvest is 2-4 weeks late across all regions. The start, peak and end of a growing season in Kenya are marked by milling dates; while normally the Central Highlands would see peak production from early January through mid-February, this year qualities are expected to come to mill starting at the end of January and through the end of February with some late collections continuing until March. As such, we anticipate arrival will be commensurately later.

Kenya is seeing a reduction in demand for commercial qualities, which is expected to push down average auction prices overall. Through the end of 2022 a majority of lots came from the Machakos region in the East, and as auction reopened after the holidays, prices remained low causing many farmers to delay on delivering their peak P1s qualities. In the end we expect that increased competition for these limited top quality lots means that prices are likely to remain firm for 87+ direct export lots. Smaller grades, and 85-86 cups, however, will be available through the auction at rates lower than last year, and at a discount of 40-60c under AA grades this year. ). Despite lower production we expect prices will be the same or slightly lower overall due lower commercial demand, a 9.1% inflation rate, and the weakening of the Kenyan shilling against the USD. 

Last year’s prices were a historical high, whereas this year auction prices – thus far – have been the lowest seen since 2014. While this mostly applies to commercial grades, those are the majority of Kenya’s production and will impact farmer incomes nationally. 

The memory of high prices remains fresh: those who decide to compete for specialty microlots should be able to come close, but overall incomes will be down, creating additional pressures for farmers to do what they can to get paid quickly. At the same time, however, lower prices encourage farmers who can wait to delay their deliveries, which in turn is expected to increase prices as main volumes (and qualities) start to come in. 

With prices down, during a down harvest, and in the recent memory of high prices – we’ve seen greater interest in producing for direct export to get the quality premiums – and stability – associated with specialty.

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The traditional washing method in Kenya—shown here at Ndimaini FCS—sorts coffee by “grades” based on density. Lighter beans (known as P2 or P3) are floated on top of heavier beans (P1), which are pushed upstream to force separation. All three density grades are dried separately.

Challenges and Discussion

The Kenyan system of export is highly bureaucratic and regulated by design to keep buyers at arm’s length from the growers, and vice-versa. Smallholder groups are built around factories (wet mills), and organized into cooperatives (FCS – Farmer Cooperative Society), who must sign with marketing agents to get their coffee milled and brought to auction or export. Following a relationship through the harvests, or a single lot through to export, requires navigating changes in cooperative membership and management, then the marketing agents, mills and exporters with whom they must work. In Kenya,  all incentives point towards volume. Farmers compete on yield per tree (20KG cherry being brag-worthy); cultivars are prized for promising higher outturns (to the point that AAA or Elephant Beans are more abundant than peaberries); and agronomists advise on cultivars that push yields higher still (grafted Ruiru-11 over Batian, for example, the former being better in the field, the latter being better in the cup).

And then there is the mill, whose business model is straight volume. Through their marketing agent, mills sign-up farmer groups to secure volume. That they use cash advances against outturns, charged with interest, mills act not only as buyers to Kenyan producers, but as banks as well. They make money by processing coffee and moving it quickly toward sale. In this, their interests are aligned with farmers who want to cash-out as soon as possible since —also by law – producers own their coffee (and don’t get paid) up until the final sale for export. This incentivizes producers, mills and marketing agents to take lots through the auction, which can have a two week turn from milling, as opposed to a direct export sale which can take months.

This creates an export kaleidoscope of relationships where you often see on-farm fertilizer stores managed by 3rd party agronomists in the employ of marketing agents who are tasked with bringing volume to mills owned by international exporters who are interested in consistent container-loads of commercial-grade coffee (across three main qualities FAQ, FAQ+ and PLUS). And in capturing as much as they can along the way to export. . 

Exporters control the supply chain; exporters direct the supply. And for this reason, while Kenyan coffee is renowned for quality, volume is prized above all. Plus, the national auction system works as intended: it’s quick, easy, and transparent for moving a vast majority of the country’s production every week. Direct export can be—and often is— more finicky and slow.

For these reasons, and more, innovation is difficult in Kenya. Even as regulations ease, the cost of experimentation is high. The auction classifies any coffee that is not fully washed as mbuni (seconds); often, these styles of coffees—naturals and anaerobic dry processes—are the only coffees smallholders without access to a washing station can produce. And because of mill minimums and issues of timing, it’s been historically difficult to see small lots from the farm through to export. What’s not successful enough for the direct export market must be sold locally as mbuni (seconds). 

In short, Kenya’s system is built from the top-down, with policies around price controls and pulping rights for farmers disguising long-entrenched pricing and power dynamics which—in the end—leave farmers with less of the export value, and less reason to invest in coffee as more than a commodity. The system dynamics also discourage producers from participating in the kinds of lot separation or improvements in demand from specialty buyers. Where these two come together—quality and connection to specialty buyers—is the direct export channel. 

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Key Suppliers

Supply ChainStrategyProducers
Cooperatives (Central Highlands)Follow long-term partners through marketing agents; identify best collections.Giakanja FCS
Ndimaini FCS
Kiawamaruru FCS
Small Estates (Central Highlands)Recruit and support progressive producers through East African School of Coffee Commercialization Workshop.Privem Estate
Njemu Estate
Rurima Estate
Guchienda Estate
Muhtonio Estate
Murage Estate
Small Estates (Western Rift Valley)Recruit and support progressive producers through referrals, visits, direct consultation and coordination with local support teams.Sugomo Farms
Muinami Estate

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Sourcing Strategy & Supplier Updates

This year, while we are continuing to target top lots from perennial partners like Giakanja, Kiawamururu and Ndiamani, we’re also expanding our support towards small estates, both in the Central Highlands and in the Western Rift Valley.

Cooperatives, Central Highlands. This year has also seen a revival within Central Highlands Cooperatives (Farmer Cooperative Societies), many of whom have voted in new, younger board members over the off season. This was true generally throughout the region, and specifically for long-standing partners within Giakanja FCS, as well as Kiawamaruru FCS whose drying beds were full at the time of our visit in early December, and on-track for some exceptional exports this season. 

Small Estates, Western Rift Valley. Western Kenya used to be the country’s largest coffee region. As cooperatives in the region collapsed near the end of the 20th century, however, farmers pulled up their coffee trees, turning to other more reliable crops. Far from Nairobi, smallholders went without support, and estates went fallow. The business model since then has been volume – sign up with a marketing agent to manage your farm, plant Ruiru-11, and wait to see what happens at the auction. 

Because of this, quality from the West has come in lower than from the Central Highlands. Yet, more recently, some select growers in Western Rift Valley are taking a different path, one lined with Batian and SL varietals planted in highly organized blocks, supported by capable and quality-minded farm teams, as well as all of the equipment, infrastructure and will to see their vision through. This year, as consequence, qualities in the West are up—and in some cases, on par with qualities from the Central Highlands. Because of the delay in harvest in all regions of the country, milling for Western Rift Valley coffees is pushed into December and January, the start of peak processing in Central Kenya, allowing for the consolidation of fresh lots across the two regions. Two new, medium-sized estates from the West, Sogomo and Muinami, emerged from our strategy of pursuing quality-minded producers regions outside of the Central Highlands. They are examples to their neighbors, showing the coming of specialty coffee to Western Kenya, and examples of what’s possible from this historic growing region. We’re excited to see some of their select lots through the mill and to export for the first time, and for what comes next. 

Small Estates, Central Highlands. Closer to Nairobi, this increased focus on individual farmers is supported through a partnership with the East African School of Coffee (EASC) which opened in 2021 out of Gigiri, Nairobi. For the 2022/23 export cycle, EASC is offering a ‘Crop to Cup Commercialization Workshop’ that brings in agronomists, cuppers and a new micro-mill to give top producers hands-on experience in seeing their best microlots through to export, and in doing so, a better understanding between best practices on the farm and quality-based premiums on export..

In December, an agronomist named Mbogoh Harunjeru was assigned to small estates in and around Embu that will make up the workshop’s first class. During farm visits Mbogoh used a checklist of best practices to establish a baseline for each farm, heavily emphasizing post-harvest processing through to storage. Importantly, Mbogoh  worked with producers to develop a ‘Lot Separation Strategy’, supporting the new concept by explaining the benefits of getting to know one’s farm, and separating the harvest into a portfolio of products based on quality. Together they put in place systems to support this strategy, and to identify which coffees might have the greatest potential for quality-based premiums. These lot separations were collected mid-late January for use in a hands-on workshop in February where farmers can take part in the cupping and marketing of their coffees. Offers will be made for these lots against a transparent price schedule that adds quality-based premiums on top of auction averages. Pre-shipment offers from this program are expected to be available by March, landing in June.

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How to Get Involved

First and foremost, you can support the work of these independents and our partners by cupping and giving feedback on their coffees. We hope you’ll contract them and support the work directly through the premiums flowing back to them.

We expect samples to come in late February-early March, with a bulk of arrivals in late June-early July

Feedback from this year’s coffees will be used to offer other regional workshops in the harvests to come. Contact your trader to join the conversation and let us know what you’re looking for so we can include it in our plan.

– The Crop to Cup Sourcing Team

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