Kenya’s coffee auction in 2012-13 falls 13 percent

The value of coffee sold at Kenya’s coffee auction in the 2012/13 season fell 13 percent to $166.7 million compared to a year earlier reflecting lower sales and a drop in global prices, officials said on Tuesday. Kenya, whose high-quality beans are sought by roasters to blend with beans from other producers, sold coffee worth $190.8 million in the 2011/12 season that runs October to September. In 2010/11, it earned $221.1 million.

"We have seen a slight stabilisation of prices in the current new season but still there’s nothing to celebrate just yet," Daniel Mbithi, chief executive of the Nairobi Coffee Exchange, told Reuters.

The east African nation exports about 90 percent of its coffee through the exchange, and the remainder is sold directly by growers to foreign buyers.

"The season was badly affected by subdued international coffee prices and we never got to recover," Mbithi said.

In the 2012/13 season, 625,185 60-kg bags of coffee were sold through the exchange compared with 722,769 bags a year earlier, SAID Kenya Coffee Traders Association (KCTA), which runs the auction.

The average price fell to $166.7 per 50-kg bag from $220 per bag in the 2011/12 season, KCTA said.

Kenya expects its overall coffee export earnings to dip slightly in 2012/13. Industry regulator Coffee Board of Kenya forecast in July that about 46,000 tonnes of coffee would be sold in 2012/13 compared with 49,000 tonnes a year earlier.

It expected export earnings to slip to 18 billion Kenyan shillings from 19 billion in the previous period.

Coffee exports were at one time Kenya’s leading foreign exchange earner but have slipped from a record level of 130,000 tonnes in 1987/88 – a slide analysts blame to a large extent on mismanagement of the industry.

Many small-scale coffee farmers disillusioned by poor earnings switched to other crops or sold land for real estate.

The area of coffee plantations in Kenya has fallen to 109,000 hectares from the long-term average of 150,000 hectares.

The exchange usually holds auctions every week but sometimes switches to fortnightly sales when supplies fall. Copyright Reuters, 2013