GEOGRAPHY & CLIMATE:

Kenya sits on the equator on Africa's east coast along the Indian Ocean. Its central plateau is cut by the Great Rift Valley. The land to the north is desert, while to the east lies a fertile coastal belt. The total land area is 218,907 sq. miles and has a population of 28.8 million (fastest growing in Africa).

The climate is mostly equatorial, but influenced by monsoons and the Indian Ocean tradewinds. The long rainy season is from March to May and a shorter rains arrive between October and December. The dry season stretches from January to March.

COFFEE BACKGROUND:

Coffee cultivation in Kenya began in about 1900 when Arabica coffee brought from Ethiopia was planted near Nairobi by Christian missionaries. From this initial plantation of about 250 hectares, the industry has grown considerably and an estimated 160,000 hectares are now devoted to coffee. The Coffee Research Foundation at Ruiru undertakes specialized research involving all aspects of coffee production: plant seedlings, control of coffee diseases, pest control and farm management. All coffee produced in Kenya is marketed on behalf of the planters by the Coffee Board of Kenya, through an organized and open weekly auction in Nairobi. After tourism and tea, coffee is the most important foreign money earner for Kenya today.

SPECIES: Arabica

ALTITUDE AT WHICH GROWN: 4,500 - 6,400 ft.

PREPARATION METHOD: “Washed”

ANNUAL PRODUCTION: 1,670,000 bags (99-00 crop)

SHIPMENT PERIOD: Main Crop - December - July

Fly crop - August - December

TYPES OF COFFEES OFFERED:

Washed Kenya AA Estates (Screen 17 & 18 ie.over 7.20mm): Grown along the foothills of Mount Kenya with perfect climate, altitude, deep red volcanic soil, production and processing methods and strict standards enable us to pick and select some of the most prized lots from the weekly auctions and offer them to you in an intact form as an individual parcel of between 30 - 100 bag lot. These coffees have the absolute perfect balance of body and acidity with that extra richness and intense black-currant flavor, and are often rated Class 1 or 2 out of the 10 different classification ratings set by the Coffee Board of Kenya. . During the last few years, we have been very aggressive in selfishly buying the very best lots available at record breaking prices. We definitely do not believe in raising the prices of coffee artificially but with the same token will not give up our quest for buying the absolute best for our most discriminating buyers such as Allegro Coffee Co., Boulder, Co ; Peet's Coffee & Tea, Emeryville, CA, etc.

Washed Kenya Regal AA Plus (Screen 17 & 18): Grown under the same conditions as the above. These are slightly lower in flavor intensity but well above the regular Fair Average Quality (FAQ) and are rated between Class 2 & 3. We offer these coffees at a discount to the Estate coffees and thus make them very attractive to use and uplift your own blends. With our experience, we select various lots at the auction that would blend together rather than fight with each other. These lots are then brought to our sophisticated Quality Control Facility in Mombasa where we further improve the quality with the help of our own Screening, Catador and Electronic Sorting Machines. We blend these coffees together to make a container of up to 300 bags. We are one of only three exporters that have such a facility and are very proud of it as it gives us total control before the coffee leaves our warehouse for export.

Washed Kenya AA FAQ (Screen 17 & 18): Grown under the same conditions as the above. FAQ stands for Fair Average Quality and the quality depends upon the integrity and standards of each exporter. The quality conscious exporters who carefully select better lots, and the final blend could be quite close to Kenya AA FAQ Plus. The bean size is still Screen 17 & 18, whereas the cup quality falls under Class 3 & 4.

Washed Kenya AB Estates (Screen 15 & 16 ie. Over 6.80mm): Grown under the same conditions as above. Because of the smaller size of the bean, it does not contain as much of the chemical compounds as AA bean and thus the intensity of the flavor is also slightly lower, often around Class 2 & 3. However, the smaller AB bean has a longer shelf life than the AA bean.

Washed Kenya AB FAQ Plus (screen 15 & 16): Grown under the same conditions as above. Here again the similar estate lots are blended as in AA FAQ Plus. The cup quality would be around Class 3.

Washed Kenya AB FAQ (Screen 15 & 16): Grown under the same conditions as above. As in the case of Kenya AA FAQ, selection of lots to be blended together is important to produce this quality. The cup rating would be between 3 & 4

Washed Kenya C (Screen 14 & 16): Grown under the same conditions as above. The size of the bean is even smaller and further reduces the chemical compounds and ultimately the flavor intensity, thus fetching Class 4 or 5.

OTHER GRADES AVAILABLE:

Washed Kenya E (Screen 20): This is the largest of all grades in size and has been named Elephant grade in the grading. Usually there are two seeds joining together to form the seed in a single cherry. This is the source of ears when the seeds part during handling. The quantity available of grade is very limited and the cup quality is around Class 5 & 6.

Washed Kenya Grade PB (Screen 16): These are round beans which usually grow in a single cherry bean. The quantity available is also limited to around 10%. The cup quality is around Class 3 & 4.

Washed Kenya Grade T (Screen 10 & 14): These are the thinnest and the smallest beans, mostly broken from the main grades. Normally, Grade T & C are blended together to establish a "grinder" quality.

The cup quality is around Class 6 & 7.

Washed Kenya Grade TT (Screen 15 & 18): The quantity available is limited. These coffees somehow escaped all grading processes. The cup quality is around Class 5 & 6.

Unwashed Kenya Grade MH (Screen 15 & 17): These are unwashed coffees whereby the pulp is not removed by the wet process. There are a few defects and the cup quality is earthy, and would be Class 7.

Unwashed Kenya Grade ML (Screen 12 & 15): These have a lot of broken and black beans. The cup quality is earthy, unreliable and would be between Class 8 & 9.

Personal Comments:

KENYA 2014/2015 CROP ASSESSMENT – 10/14/14

As we expected last years 2012/13 crop ended at 44,000 Metric Tonnes and for this year (2013/14) we have seen the coffee sold at the auction was 671,000 bags. Assuming that the direct sales would be around 10% in line with previous year's trend, this may have been around 67,000 bags, bringing the total to around 738,000 bags, which is equivalent to 44,286 Metric Tonnes.

As we mentioned in our last report, mainly due to unstable coffee prices, the farmers are diversifying into maize, banana, apple and tree growing. According to the World Agroforestry Centre, it noted that the young farmers in Kenya are"losing patience" with coffee and venturing into other enterprises or moving to the cities. It also noted that the decline in coffee production among smallholders farmers is mainly dues to lack of access to credit, inadequate transportation andcommunication, poor banking infrastructure and poorly managed cooperatives.

In February, we saw new political development whereby the Governor of Nyeri and four others from Kiambu, Meru, Murang'a and Kirinyaga counties resolved jointly that they would employ a common approach in marketing coffee for "the benefit of farmers" in their region. This created a lot of distraction and since this was the first time the farmers were involved in marketing coffees, it also created a huge opposition by many stakeholders in the industry, and finally it resulted in coffee getting back to the market through regular channels from April 2014. However, during that period, some importers had been told that the Nyeri Coffees would not be available. By the time they knew they could get the coffee, they had already bought their coffee.

The crop for the coming year, 2014/15, could be lower and indications are that the production may go down by anything from 20%-25% from 2013/14 crop. The major reason is that the rainfall had been very scattered for most of this year and as a result, the coffee trees did not go through the "drought stress" which is required for flowering. Furthermore, since the farmers had over committed themselves through unregulated loans the previous year, they do not have spare funds to spend on better crop husbandry with fertilizers and insecticides.

KENYA 2011/2012 CROP ASSESSMENT 7/25/12

Although the rains and bad weather at the beginning of the crop year had affected the quality and quantity, it improved during the second round of picking and so we expect the crop to reach the 55,00 MT we originally predicted.

However, currently the weather is very cold with a lot of rain causing the cherries to prematurely start falling from the trees.  To make matters worse, the Coffee Berry Disease (CBD) is becoming an epidemic.  As a result, we estimate the 2012/13 crop year will see a drop of at least 20% to 44,000  Metric Tonnes.

A long-term trend in the future is the increasing reduction of land available for coffee growing due to population growth.  As a result the farmers in Small Holder areas are uprooting coffee trees and growing more cash crops to feed their families. As the sons of farmers marry, the farmer sub-divides his farm giving plots to the new families who, in turn, build their own homes and grow their own cash crops, thus further reducing coffee production.  Larger estates have also started uprooting trees and selling their valuable land to developers of homes & commercial properties especially in Kiambu, Thika, part of Miranga, and even in some Nyeri areas.  Thus land where coffee is grown is becoming further reduced.

Fortunately, new coffee growth is starting up in the Rift Valley region although the conditions are not as perfect as in the Central Highlands of Kenya.  Growers are beginning to plant a new variety of coffee there called Batian, which was discovered by the Coffee Research Foundation last year.  This variety will be available commercially in 2-3 years.  The advantage of Batian is its resistance CBD and gives a high yield (40g more coffee per coffee tree).  However, it is too early to say whether it will be comparable to the famous St. 28 & St.34 varieties.

Our fear is that down the road, the producers, millers, and marketers will no longer sell the different varieties of Batian, Ruiru 11, St. 28, and St. 34 separately but will bulk them together and sell them as generic "Kenya Coffee"!

Through all this, there is a political unknown that will certainly affect Kenya coffee in the future.  The issue centers on proposed constitutional changes, yet to be enacted, to bring more transparency and accountability to the Cooperative Societies' corrupt leadership.  Those who control these Societies currently hold the farmers in a virtual servitude far greater than the colonialists ever did.... We’ll see. 

KENYA 2010/2011 CROP ASSESSMENT - 6/29/2011

As we predicted a year ago, due to excessive rainfall, last year’s (2009/10) crop came in at the lower than usual 42,096 Metric Tonnes.  Due to this crop shortage and significant increase in world coffee prices, there was a much welcomed 50% increase in income for the much impoverished farmers. As farmers received record payments, overall coffee farming has picked up. There has also been much better weather and so we expect at least 15% increase in production which may range from 49,000 to 55,000 Metric Tonnes for the coming year as well as higher quality.

EAFCA CONFERENCE IN KENYA – 3/30/10

We attended this year's EAFCA (East African Fine Coffee Association), which was held this year in Mombasa, Kenya in February. The attendance has been significantly increasing at these annual conferences and this year there were 700 delegates. EAFCA, is dedicated to the marketing and promotion of East African coffee and continues to grow and now represents the interests of eleven countries, Kenya, Uganda, Tanzania, Ethiopia, Rwanda, Burundi, Zambia, Zimbabwe, Malawi, South Africa and most recently, The Democratic Republic of Congo. Last year's membership consumed 172,000 Metric Tonnes of the 611,000 Metric Tonnes of coffee that was produced, Ethiopia was its biggest consumer at 150,000 Metric Tonnes. Not surprising, as Ethiopia is the original home of the coffee plant and so has a rich coffee culture.

Showing Shirin Moayyad of Peet's Coffee & Tea our Quality Improvement Facility in Mombasa, Kenya

As the above conference was held at our home base, we were able to host our customers and friends attending the conference with a private luncheon, tours of the excellent port facilities and of our own company's Quality Improvement Facility.

Our hope is that all our customers who are planning future trips to Africa will include Mombasa on their itinerary. We will do our very best to make your visit a memorable one.

KENYA 2009/2010 CROP ASSESSMENT – 5/25/10

Rain, rain and continuing more rain since last years assessment has wreaked havoc with production and quality. As a result, the anticipated 53,000 Metric Tonnes production for the 2009/10 year is coming in at a much lower 40,000 Metric Tonnes number with many mills closing down earlier for lack of stock. Because of the continuing rain, proper flowering for the coming November crop has suffered too, which will translate into lower yields this coming main crop. At best, our long range crop forecast for 2010/11 will be about the same as this year's, at approximately 40,000 Metric Tonnes. This much-reduced yield is not good for the farmer financially. Yet despite the current situation, we are optimistic for Kenyan farmers are a tough, hearty lot…they are survivors.

KENYA 2008/2009 CROP ASSESSMENT – 7/9/09

Unfortunately, the final 2007/08 crop ended at 42,333 metric tonnes, 15% lower than what we had predicted. Again, the weather played havoc as the late rains caused the flowers to fall of prematurely and also prevented some existing cherries to ripen properly. Out of the total crop, 25,635 metric tonnes were produced by the Co-operative Sector and 16,698 by the Estate sector.

Since we had fantastic weather towards the end of last year, we had predicted a banner year for the 2008/09 crop. We haven’t been wrong as this year’s crop is estimated to settle in around 60,000 metric tonnes, of which already 57,831 metric tonnes have been harvested. The Co-operative sector has produced 35,709 metric tonnes and the Estate sector has produced 22,122 metric tonnes. 80% of this coffee has been sold through the auctions and the balance through direct sale.

Due to heavy flowering in January and February of this year, we thought the 2008/09 crop would end up even higher at 65/70,000 metric tonnes, but the rains which were supposed to boost this early crop to close the 2008/09 coffee year have failed. This means that the main crop for 2009/10 season will be affected. We predict the 2009/10 crop to drop to 53,000 metric tonnes.

“AND THE WINNER IS…..MOLEDINA’S GATAMBOYA – 11/5/08 

Moledina Commodities’ reputation for supplying the best of the best continues according to the Pacific Coast Coffee Association at its Pete McLaughlin Cupping Competition in Hayward, California on May, 22, 2008.

Mohamed presenting the PCCA Pete McLaughlin Cupping winning plaque to Samuel Bochu (Factory Manager of Gatomboya Factory) and Wachira Mwago (Chairman of the Baricho FCS)

Of the 36 submittals, our Gatomboya AA was picked as the best coffee from Kenya by 41 cuppers who had participated at this annual competition. The Gatomboya Factory, from the Nyeri district of Kenya, is one of the four factories belonging to the Baricho Farmers Co-operative Society. The 300 small-scale farmers that belong to the Gatomboya Factory have consistently produced some of the finest coffees from Kenya. In 1997, it was from this same Gatomboya factory that we paid the highest price of $1,080/50 kilos that was ever paid at the Kenyan auction. We are so proud of the hard work of these very dedicated farmers who produce 1,500 bags annually, out of which only 450 bags are of AA grade.

KENYA 2007/2008 CROP ASSESSMENT – 2/15/08

 Final figures for the 06/07 crop are now in at 51,762 metric tonnes, up from the previous year and only slightly less by 1,238 tonnes than our prediction a year ago.  (Not bad!)

 Due to increasing world demand, the farmers are enjoying higher prices and now investing once again in improved husbandry.  This includes efforts to rehabilitate abandoned farms and renewed interest in political reforms effecting coffee marketing and quality --- all to the good. However, countering this was the weather.  Though the rains started as usual last April, they continued on relentlessly through last summer to October which caused a lot of flowers to fall off prematurely and also prevented some existing cherries to ripen properly.

 We therefore predict that the 07/08 crop will be down 10% coming in at about 48,000 tonnes.  This lack of proper ripening will also result in lower quality --- not so good.  But there is a silver lining behind these clouds in that this super, saturated past season has set the stage for a fantastic future.  So far the 08 weather has been really good and if the  periodic rains continue, the flowering will be incredible resulting in an 08/09 banner year for both quantity and quality.  We are excited.

As to the social unrest caused by what many are saying was a stolen national election, both sides are trying to cool down thanks to the mediation efforts headed by retired UN General Secretary, Kofi Annon and other prominent Africans.  So far, there have been no significant problems in the coffee producing areas although everyone is jittery.  Our hope is that the rival Kikuyu and Luo tribes involved will realize that the Kenyan economy is dependent on coffee and tourism the future of which is dependent on peaceful political accommodation.  As a side note, US Senator and presidential candidate Barrack Obama’s father is from Kenya’s Luo tribe.

KENYA 2006/07 CROP ASSESSMENT -  3/19/07 

The final 2005/06 crop came in at 48,297 tons, lower than our estimate of 52,000 tons. This was mainly due to delayed payments, high cost of production, indebtedness and lack of affordable credit and farm inputs. However, due to recent price improvements, farmers are making efforts to improve the quality and quantity of coffee. We, therefore, estimate the crop for the year 2006/07 to be around 53,000 tons.

Bidding at Nairobi auction with our buyer, Naim

Unfortunately, we are also seeing an increase in demand for planting materials such as Ruiru 11 seedlings, especially amongst the large Estate farmers. Although, this variety matures faster, cuts production costs by 30% and is resistant to coffee berry disease and leaf rust, it still does not come close to the original unique Kenya taste of the original bourbon varietals like SL 28 and 34. We constantly encourage the growers and especially the small scale farmers to continue with the original varietals in order to maintain the high quality of coffee with its unique taste, otherwise they will just commoditize the coffee in Kenya and it will soon become like any other ordinary tasting coffee of the world.

The "Second Window" is now officially open in Kenya, yet the first direct purchase contract has yet to materialize due to legal responsibility issues required of those who enter into the contract.  We shall keep you informed on any developments.

“SECOND WINDOW” IN KENYA: STILL IN THE AIR – 3/15/06 

As readers know, the much touted “Second Window”, considered to solve every ones problems in Kenya, has been in effect for few years in Tanzania.  Records show that 93% of farmers have opted to sell still through the auction system, deciding it was in their best interest to achieve the best prices.  So, in the end, Tanzania’s Second Window has turned out to be “Much Ado about nothing.” Our opinion is that it will have the same fate in Kenya. In as much as we agree that the farmers must be given a choice to market their coffees, they will soon realize that once they have the opportunity and have burnt their fingers a few times, they will come running back to sell at the auctions. As we write, the rules for this Second Window have still not been gazetted, although we have been told that they would be for nearly a year now. Even if they are known soon, they will have to be enacted into a law, which could take some time since the Kenyan Parliament is not in session and when the law makers do return, they have many other urgent matters to discuss on their plate. As a result, the “Second Window” could be pushed to the back burner once again! This week, we saw an increase to 36,000 bags being offered as compared to 26,000 bags last week. Is this a sign that the farmers are getting tired of waiting, lest they miss the current up-tic in prices?  So, the bloom is off the rose even before Second Window has hit the streets.
 

KENYA 2005/06 CROP ASSESSMENT -  3/15/06 

A year ago we projected a 60,000 ton crop for the 2004/05 year. But this came in at 49,510 ton due to the continuing drought. Recently, the Coffee Board of Kenya has predicted that due to draught, which resulted in famine, could cut the 2005/06 harvest by between 15-20% from their earlier estimate of 65,000 tons. Fortunately, the rains have started again to the point where much of both the fly crop and especially the main crop will be saved.  So our sense is that the crop will now come in at about 52,000 tons --- still an anemic figure but not the catastrophe that would have been. 

Giving a hand to a farmer

During my visit to few farms on our annual Moledina Kenya Coffee Safari just before the rains, I noticed the coffee trees looked very depressed. Hopefully, the rain will help a little. But it was also obvious the farmer has not been able to afford good crop husbandry due to lower prices of coffee. The representatives of the one of the Co-operatives asked us quite openly to help them to buy fertilizer and insecticides as they had no money to maintain their trees. I was very saddened to see this desperation and feel very strongly that the government has to intervene and revive the co-operatives with better management to help the farmers get out of this economic plight. 

CHANGES BREWING – 3/23/05

I recently visited Kenya to assess the impact of the rule changes percolating throughout the many industry rumor mills. What is being referred to as the “Second Window” is a push to allow a portion of production (probably about 30%) to by-pass the auction and be sold directly to buyers through licensed brokers. Prices would be determined by those established at the most current auction, plus a surcharge of 3% … much like the system already in place in the tea industry.

The exact details of this “Second Window” are to be worked out by a newly established committee by the Government Cabinet of six members, one from each of the Agriculture, Finance, Co-operatives, Trade & Industry, Office of the President and from the National Security Ministries. They will review all the guidelines given to them by the Minister of Agriculture, Mr. Arap Kirwa, and once agreed, these guidelines will be gazetted (as a legal notice in a newspaper) and they would then become law.

While not yet a done deal, we feel this “Second Window” will be adopted in the near future and will benefit our customers. Moledina Commodities’ strength has always been its close ties to the land and its people. These ties and our network in Kenya have served us well in the past and will become even more valuable since we are considered to be “the” preferred customer of the best offerings of the farmers. So, we are excited for the future and our ability to provide our customers with increasing supplies of the “best of the best”.


KENYA 2004/05 CROP ASSESSMENT & QUALITY – 3/23/05

Provided the weather continues to cooperate, we stand by our original prediction of the 2004/05 crop to come in at about 60,000 tons.

This being said, as must be apparent to most, Kenya’s quality-edge over other countries has noticeably been slipping over the last 2-3 years for the following reasons:

1. Worldwide weather pattern changes have effected the coffee growing cycles in Kenya, as a result there is sometimes lack of rain during the growing season and not sufficient sunshine during the drying period.
2. Kenya has been growing coffee for over 100 years now and gradually the nutrients in the volcanic soil that have made Kenya coffee so distinctive are becoming increasingly depleted, especially in the lower elevations. Efforts to replace these nutrients with fertilizers and chemicals are not having that much effect, in fact, they are burning the soil. However, in the higher altitudes, there has not been as much depletion of nutrients, allowing the small scale farmers in these areas to produce higher quality. Also, to their credit, the small scale farmers tend to be more selective in their picking of only ripe cherries than do the large farms in the lower areas, thus producing better quality coffee.
3. The size of the family is getting larger and as it does so, all the new children want their own homes along with small areas for growing subsistence crops. As a result, the acreage for coffee growing within the same farm is getting smaller and smaller. Secondly, due to population explosion, coffee growing towns like Thika, Ruiru, Nyeri, Meru etc., are forced to expand into farmlands, further reducing available coffee growing areas.
4. We are also finding that when coffee prices are low, the small scale farmer finds it more profitable to move from coffee to dairy farming or growing tea, which also flourishes very well at the higher altitudes.
5. Also due to slow payments and too many deductions, the farmer does not have any incentive to invest in improving the farm management and thus quality

While it is sad for the country to go through this general erosion of quality dominance, we are optimistic that we will be able to continue providing our customers with the same high quality coffee to which they are accustomed.

We say this with confidence because of our three-generations-old experience and our own unique quality improvement facility in Mombasa, Kenya that helps to offer our customers, who are famous for their discriminating taste, the best coffee Kenya has to offer.

KENYA 2004/05 CROP ASSESSMENT – 10/12/04

A year ago we predicted a 65,000 ton crop for Kenya. Unfortunately bad weather and mismanagement within the industry conspired to lower the actual crop to a dismal 51,700 tons.

This being said, were going to stick our necks out again. The Early Crop is now in and up 50% from last year, 60,000 bags compared to 40,000. Based on this and reports of heavy cherry picking in most regions, good drying weather, and settlement of disputes between farmers and authorities we boldly predict .... absent interference from mother nature .... a larger crop for this year, perhaps 60,000 tons.

All indications are that quality will be up as well. The beans are larger, farmers are taking renewed interest in their husbandry, and, in general, they are more positive and optimistic. We will keep you posted as Mother Nature always has the final say.

BUCK’S COUNTY COFFEE COMPANY A DOUBLE WINNER – 6/1/04

In the latest Coffee Review’s blind cupping results, Buck’s county Coffee Company of Langhorne, Pennsylvania took first place in both the Kenyan and Ethiopian categories.

Said Buck’s County’s President, Rodger Owen, “We are delighted to be the recipient of the best Kenyan award. In mentioning the award, Ken Davids, founder and cupper of www.thecoffeereview.com said he considered this lot of Kenya as the finest he had cupped since founding of the award seven years ago. He gave us the highest rating ever, 95 out of 100. He also awarded our Ethiopian Yirgacheffe a grade 92. Both these fine coffees were supplied to us by Mohamed Moledina of Moledina Commodities in., of Flower Mound, Texas. The coffee Moledina provides has made it possible for us to please literally thousand of our customers. We value and are grateful for Moledina’s expertise in the Specialty Coffee Industry and can’t think of a better way to increase sales ….. have the best coffees.”

– 11/05/2003

Checking out fly crop coffees for the coming year in the cupping room of our office in Mombasa on 10/19/03

Having just returned from our annual “Moledina Coffee Safari”, I can report that the fly crop shows some promise of quality for the coming year. However, I find that the Kenyan Coffee industry in the grips of a crisis created by poor global prices and serious internal mismanagement.

Production has been falling gradually from 130,000 tonnes in 1987/88 to about 50,000 tonnes in the coffee year just ended. About 750,000 Kenyans used to be employed in the coffee industry but now the number has fallen to around 220,000. The biggest reason that has discouraged production is the crippling debts incurred by the growers. Most farmers today cannot even get bank loans due to bad credit.

A government appointed task force on coffee marketing has just come out with some proposals last month. The most important one is that the Kenya government consider asking the banks to cancel around 10.5 billion Kenya shillings ($134 million) owed by peasant coffee farmers. Furthermore, the government itself should set aside 5.0 billion Kenya shillings ($64 million) as a coffee development fund for long-term credit to be used in rehabilitating the industry. The task force also asked the government to pressure the state-owned regulator, the Coffee Board of Kenya to quickly pay a total of $8.5 million owed to farmers since May 2002. The extra cash flow should certainly help to revive the coffee production.

The most ingenious suggestion of the task force is to create Kenya Coffee Development Agency (KCDA), a clone of the relatively successful Kenya Tea Development Agency which has less cost centers. The KTDA has only 51 tea factories owned by farmers themselves and they can elect or fire the factory officials on their performance. Whereas, previously under 250 or so co-operative societies that served the coffee farmers, the officials were appointed by the governments and they practically had “carte blanche” to do what they liked and remain as long as they had relatives in the government. The KCDA would undertake the management of the coffee sub-sector, offer credit for acquisition of inputs and coordinate marketing and payments to growers.

In our opinion, the implementation of this report will be a “hot” political issue and not easy to implement.  There was no unanimity in its creation and the three existing, licensed coffee millers will put up a fight to preserve their lucrative marketing franchises.  None the less, it does offer the hope of reviving the industry.

– 11/01/2003

The Coffee Board of Kenya’s production estimate was most accurate for the year 2002/03 as the final figure came in just over 59,000 tonnes, which is an increase of 7.2% from the previous year. This was mainly due to favorable weather conditions. One wonders what would have been the total production if some of the farmers had not uprooted coffee trees as was reported in some areas and if some of them had more money to spend on better crop husbandry. 

Despite higher production, the export quantity and earning fell 3.8% and 18.2% respectively during the October 2002 to August 2003 period due to poor demand from overseas and continuation of depressed world prices. (See chart below). The overall quality was also poorer as farmers just do not have the money to take care of the trees.

The production for 2003/04 is expected to be around 65,000 tonnes, but a lot will depend on whether the government and the coffee industry solve the internal mismanagement problems within the of the coffee sector.

The Top Ten Importers of Kenya Coffee
October 2002 – August 2003

– 10/31/2002 

The final production figure for the crop year 2001/02 came to 55,020 metric tons, even lower than our revised estimate of 60 – 65,000 metric tons on 1/18/02. Out of this production, total exports were only 48,050 metric tons as compared to 72,562 metric tons shipped in the previous year. As a result, the export earnings dropped sharply by over 42% to $81.63 million from $140.65 million the year before. The peasant farmers are totally discouraged with the concerns of the new coffee reforms, bad weather and the poor world prices and thus many have abandoned their coffee trees and growing other cash crops. Short of a miracle, the situation can only get worse. 

The Coffee Board of Kenya has estimated that the production for the year 2002/03 will be around 60,000 metric tons. Since we have seen better weather recently, we agree with their estimate. However, we have our reservation as far as quality is concerned. At current below the cost prices, the farmer can in no way save any money, especially for good crop husbandry. As a result, our job in finding the best of the best is going to get even harder. But we would like to assure you that, as always, we will try our darn best to get you the best available.


– 1/18/2002

We have just returned from Kenya and offer the following report.  The crop year ending September 31, 2001 closed out lower at 51,632 metric tons due to poor weather.  Unfortunately, over-all quality too, was mediocre due to the inconsistent rains during the final months of maturation.

The new Coffee Act, 2001

As we have informed our readers in previous updates, the long anticipated changes to the Kenya coffee governmental control system contained in the Sessional Paper No. 2/2001 on the Liberalization and Restructuring of the Coffee Industry, and Coffee Act, 2001 was finally signed into law on 12/31/01.  While the full details are not known as the new bill is still at the Government printers, we understand the administrative details will not be completed for the next three months. However, we are optimistic that the new plan will eliminate many of the problems that had grown ever more troublesome over the past several years.  The following is a general outline of how the new system will work, as we understand it.

Thankfully, the Auction system, which puts all buyers, large or small, on an equal footing, has been preserved.  The Auction is a proven system that keeps the large international cartels and monopolies from taking over the market of this small country.  It is the only system that we know of, that establishes a true market price.  It is a “price discovery mechanism” as Simeon Onchere, the Deputy General Manager of Coffee Board of Kenya recently put it.

Meeting with Simeon Onchere, Deputy General Manager of CBK - 1/10/02

The big change, though, is that the Auction will no longer be the property of the Coffee Board of Kenya (CBK).  The once all-sweeping powers of the CBK have been significantly curtailed.  Its principle functions from now on will be only that of regulatory, promotional and advisory services.

The Auction, Marketing, Sample Room, Information & Technology, Laboratory, Warehouse, Acct./Audit, etc. functions will be covered by a new organization, The Kenya Coffee Producers and Traders Association (KCPTA).  The KCPTA membership will be comprised of coffee growers, dry millers, marketers, dealers, auctioneers and warehousemen.  An Executive Director will manage it.

An emphasis here needs to be placed on the term marketing and marketers.  This is a new classification that allows the growers to sell their coffee to any one of several licensed “Marketing Agents” who in turn will then bring their crops to the central auction of the Nairobi Coffee Exchange. The marketing agent will have to provide in favor of the grower a bank guarantee worth between US $1 million and US $12 million dollars, or one and a half times the value of the coffee transacted on in each particular case, whichever is the higher.

Commentary:  While a new entity, we do not view the marketing agents as a new layer of “middle men”, but rather a more efficient way to deliver the needed value added services to the growers that already exist but are currently haphazardly delivered, are of low quality, and way too expensive and corrupt.  We believe that this new system will correct much of these ills, but no one will know for sure until it has some time under its belt.  April 1, 2002 is the switchover date to the new system.

Supply of new crop

Although things are still a bit up in the air until the new changes take effect, there does not seem to be any supply distortions brewing that we can see.  The new crop is coming in, with only a few of the farmers holding their coffees back until they see what the marketing agents will bring to their table.

While Kenya is frantically doing what it can to make its system more cost efficient, and will survive so long as its high quality prevails, it too suffers from the worldwide over supply of coffee.  Up until only a few years ago, World supply and demand were pretty much in balance, as were the prices.  Distortions to this stability were only caused by weather anomalies.

Over the past five years, consumption has not increased to any significant level.  What has driven the prices downwards is the growing over supply caused principally by huge production increases in Brazil and Vietnam.  World prices have dropped almost 60% as a result.  As a result about 30% of farmers in Kenya have abandoned their coffee trees, due to poor returns, which are much lower than their productions costs.  Quality is falling victim as well.  Last year, producing countries received only 14 cents of every dollar collected at retail and the farmer gets even less.  There is so little “blood left in the turnip that one more squeeze will turn it into a radish”.

Can we help?

We could ease the situation and help the coffee growers in whatever small way we can. Moledina Commodities has been supporting Hope & Mercy International Ministries, a Christian Charitable Organization, which has been providing practical economic development assistance to failing rural communities. In the coffee growing areas of Nyeri, Hope & Mercy, in conjunction with Othaya Family Helper Project, supports the Karima Grade Goats Self Help Group, building of cisterns to store uncontaminated water for schools, and provides tuition support to educate the children.  While the latter two need no explanation, you say goats??

Well, yes, goats.  As their husbands coffee revenues began to dry up and they could no longer pay to educate their children, 125 mothers took matters into their own hands deciding goats were the answer to providing extra needed cash.  The Othaya Family Helper Project has been helping them build the herd.  Goats are low maintenance, will eat just about anything including weeds and underbrush, provide a good source of milk, spare milk is sold for cash, and, here is the good part, a great source of free, high quality organic fertilizer for their husbands’ coffee trees.  For more information on Othaya Family Helper Project, send us an email.

Goodby Mr. Gatere

Cupping with the new CBK Chief Liquorer, Michael Mungai - 1/10/02

Mr. Gatere has been my cupping mentor and a good friend since I entered the business. Much of my success comes from what I have learnt from him.  He was the best of the best at his trade and freely passed on his cupping skills to all comers.  His baton has been passed to the very able Michael Mungai, another of his protégés.  We will miss you, Mr. Gatere.

- 6/5/2001

The changing weather patterns and the worldwide depression in coffee prices for the past two years are continuing to impact Kenya’s coffee industry.  For example, the traditional spring 2-month “long rain” and fall 2-month “short rain” cycles have been out of whack for few years.  In the beginning, El Nino was blamed but that is now long gone and the cycles should have re-adjusted but  haven’t.  Last year’s drought has been followed by 6 months (as of this writing) of continuous rain.  The good news is that this means a potentially bigger, higher quality 2001/02 crop is in the making.  The bad news is that if these rains don’t taper off soon, the cherries won’t mature properly.  It’s time for the sun to come out.

 There is a growing concern in Kenya that these recent climatic shifts may be caused by the acceleration of deforestation in the region and resultant thermal changes and soil erosion.  Deforestation started in the forests around Mt. Kenya and Rift Valley and has now spread even Langatta area of Nairobi.  Only time will tell if this deforestation will have any significant impact on Kenya’s coffee industry.

 Thus the final 2000/01 crop will probably reach 61,000 metric tons, lower than estimated due to last year’s drought.  Next  year should be better because of the rains already mentioned.  Quality should be better too assuming the sun cooperates.  Yet prices are still depressed due to the worldwide over supply.  While this is a short term benefit to coffee buyers, in the long run low prices mean a further lowering of quality levels to the detriment of all.  Farmers are no longer tending to their trees due to the lack of money.  More and more are being forced into other lines of work just to feed their families …. bare subsistence levels prevail.  The Kenyan government is concerned enough now to the point where the parliament is currently studying The Coffee Act and ways to improve the industry. In our 12/5/2000 ASSESSMENT (see below) we made three recommendations the government could adopt that would ease the plight of the growers.  We’ll have to wait to see what they finally decide.

On a lighter note, concerning deforestation:
An itinerant lumberjack applied for work with one of the Nairobi lumber companies.  Being short of labor and ignoring the applicant’s small size, the crew chief gave him a hectare of large trees to cut, more than an experienced crew of ten could do in a day.  An hour later the entire hectare had been cleared with the logs neatly stacked for pick-up.   Stunned, the crew chief asked where the new hire learned to be such an incredible lumberjack.  “In the Sahara.” Came the reply.  “But that’s a desert?”  puzzled the crew chief.  “Not when I first got there.” grinned the new man.

For our quality conscious customers, Moledina Commodities’ sole mission is to provide you with the only the very “best of the best” coffees from around the world.

 
- 12/5/2000

Weather and Factionalism Take a Toll
Last year’s bumper crop – October 1, 1999 to September 30, 2000 – closed out at 100,500 metric tons due to higher than normal rain during the short rainy season of October/November 1998. However, a subsequent drought since then, has played havoc when the rains were really needed to develop the cherries fully. This lack of moisture adversely effected the density of the bean and more importantly, the overall cup quality.

- 12/1/99
In March we estimated the 99/2000 crop to possibly reach 75,000 tons. While this is still a good figure, due to recent rains after a dry summer, the final tally could reach 80,000 tons according to the latest assessment of the Kenya Coffee Board. The fly crop is now in, but quantities are small to the point that the auction is on a bi-weekly schedule rather than the usual weekly. However, prices are reasonable and steady. The next two auctions will take place on December 15^th with an anticipated 40,000 bags offered and then after the traditional break for Christmas Holidays on January 11^th with an estimated 30,000 bags. After that, the usual weekly auctions should resume.

When we arrived in Kenya three weeks ago for our annual "Coffee Safari" everything seemed much the same as in past years. The faint rumblings about trouble within the Coffee Board did not seem to be a concern with anyone during our visit. The idea of corruption, real or imagined, was not seen as a threat to the livelihood of the growers we visited in the Nyeri district.

This perception did not anticipate the rapid course of events that is now beginning to overtake matters, especially in Nyeri. While news reports dwell on corruption at the top, much more exists inside the cooperatives, especially at the management level.

The government of Kenya must take decisive action to root out the corruption, fulfill its commitment to the coffee auction, and get the system back on track. The preservation and advancement of Kenya’s coffee industry is at stake.

We are optimistic.

- 5/25/99

As we stated in our earlier report, last year's (97/98) 53,000 ton crop was small, irregular and lower than average in quality. Global climatic shifts, caused by El Nino, were the principal reason for this.

For 98/99, now that we are better than half-way through the year we are increasing our earlier estimates from 65,000 tons to 70 - 73,000 tons for the year. This is encouraging as it implies a return to normalcy across the board, including the high quality that coffee connoisseurs expect of the world's premier growing area.

One thing that could be done to facilitate this return and ensure that the level of quality remains consistently high would be for Kenya's rapidly expanding millers to adopt the high standards of the Coffee Board of Kenya. We have noticed that many of these newer mills have a tendency to over-polish the coffee. This process generates heat by extra friction, and in a way prematurely starts the roasting process. This leaves a brownish tinge on the bean instead of the usual bluish green. While no one can control the effects of Mother Nature on quality, we must always do our best, as purveyors of fine coffee, to upgrade quality as the product passes through our operations.

Currently, the CBK auction is running at 35,000 bags per week and this should be increasing to 40,000 by early July, as farmers bring in more coffees for milling.

Because weather patterns are returning to normal, we expect next year's 99/2000 crop to be even better than this year's, probably around 75,000 tons. If the weather holds out, the quality should be better too. Furthermore, the farmers are becoming increasingly aware of the need to improve their quality. I believe, they will invest the income generated by the better prices they received last year to implement additional quality control systems.

Whatever the conditions, we will continue to provide the best of the best.

- 9/20/98

Kenya's 98/99 crop is estimated to be lower than last crop. According to press reports, estimates are varying from 53,000 tonnes to the Coffee Board of Kenyas estimate of 70,000 tonnes. The 97/98 crop produced in total 60,000 tonnes.

- 9/15/98

Things have changed in Kenya. I remember as a 6 year old playing hide & seek behind group of women hand pickers or climbing up to the top of coffee stack in our Godown (coffee warehouse) and my grandfather, Mr. Rashid Moledina would come looking for me. Today, the kids are not allowed in the Godowns. And the pounding of the sophisticated Sortex Electronic machines has replaced the murmur, chanting and laughter of the local women. I guess we were forced to change with the times and our own business growth.

I also remember when I returned after my education in England, my father Mr. Fidahusein Rashid Moledina insisted I learn the business from the bottom up. So he sent me for my internship at our Godown. Here I lifted bags, used the Screening and Catador machines, hand picked coffees , bulked (blending) coffees, stitched bags etc. At the time I wasn't really sure why my father put me through all that but now there isn't a day I thank him for giving me such an invaluable experience of learning everything there was to know about coffee. Today, if I face any problem about the coffee or the delivery, I can pinpoint exactly where the fault occurred. With all the mechanization in our Godown, it would be impossible to acquire such hands-on training today.

Politically & economically, Kenya has gone through changes. After gaining independence from Britain in 1963, politics was dominated by Jomo Kenyatta. He was succeeded in 1978 by President Daniel arap Moi, who easily survived a return to multiparty elections in 1992. Ethnic violence is now the main political issue. The major donors such as the U.S., U.K., the World Bank, IMF have all insisted the free-market approach to the economy. This has encouraged deregulation in many sectors and coffee industry has also been affected. Licenses have now been issued to a few private companies to mill parchment coffee thus eliminating the monopoly enjoyed by the Kenya Planters Coffee Union which until recently milled 100% of the parchment coffee in Kenya. There is also pressure on the Government to relinquish the monopoly of the Coffee Board of Kenya and its weekly auctions and allowing either other auctioneers or even let the farmers and various millers sell the coffee themselves. This no doubt will cause chaos in the coffee industry which so far has operated with the most fair and transparent way of selling coffee. This allows anyone a fair chance of purchasing any coffee in Kenya as long as he can pay for it.

Nevertheless, even with all the changes taking place, and this may sound biased, I really believe there is no other country in the world that can compete with Kenya in growing, processing and marketing their coffees.

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