Word from Laban Njuguna regarding international coffee market

The below sentiments belong to Mr. Laban Njuguna of Zabuni Specialty coffee, I thought to share since they speak to very many people in the coffee sector.

“I would like to share some thoughts based on my experience and understanding of the international coffee market. I will be as brief, factual and honest as possible.

First, I would like to say that the coffee task force did a good job in collecting data from Kenyans and compiling its report. I have read it and it addresses issues arising at origin including issues pertaining to cooperatives, sustainability, price discovery, etc. Having said that, what the report is rather thin on, and why it will fail to transform the coffee sub-sector, is it does not adequately address the solution to the perennial price inadequacies being experienced by farmers in the coffee industry and offering price discovery mechanisms in a sustainable and forward-thinking way that will benefit the farmer.

What the task force is proposing will be very beneficial to the cartels but not to the farmer.

I will categorically state here again, that what Kenya needs is not more of the same, i.e. a more robust coffee exchange, which is what the task force is basically proposing, but a total break from the past.

Have these folks not been paying attention to what has happened to global coffee prices in the last year? Coffee prices hit a 12-year low in 2018 due to speculators/on trading floors thousands of miles away placing bets with people’s lives and deciding what a farmer’s coffee is worth without regard to quality or even the costs of production.

Prices in the last year have been as low as 97 cents per lb. This is way below the costs of production. This is what coffee policy makers are proposing, knowingly or unknowingly, and exactly where a coffee-trading platform will lead Kenya coffee farmers to, basically, it’s a race to the bottom.

Kenya should not, must not yearn to base its coffee prices on the C price in New York, instead, our approach for price discovery and minimum pay to farmer’s must be based on coffee quality alone and not quantity. This is where Kenya’s strength and niche vis-a-vis coffee lays.

Volume producers like Brazil, Vietnam, Colombia, etc. will never be our competition or the bar by which we gauge ourselves, we are the quality standard not the quantity standard and as such we should be leading the field and playing to our strengths.

The government officials making policy have, at best, no idea how to resolve the issue of better pay to farmers or worse they have been compromised by the cartels to push the trading floor Mechanism which will entirely benefit everyone but the farmer, the gift that keeps on giving.

Kenya has to go by the specialty coffee retail price index, though fairly new, the SCRPI is a very effective tool for price discovery on coffee that is sold on a quality basis.

This transparency tools and the data they provide are what Kenya should be angling to take advantage of by Introducing policy at origin that enhances direct trade between farmers and international markets.

According to SCRPI, a tool that has been developed by the Gouizeta school of business at Emory University, Kenyan coffee in the world market, but particularly in the USA, fetches a better price/lb than any other coffee in the world. This tells me that the market recognizes the superiority in Kenyan coffee quality and wants to compensate the farmers accordingly but the main inhibiting factor is the trade and supply of coffee, the inefficient process through which Kenyan coffee is accessing international markets can only be addressed adequately and sustainably through policy changes and laws.

If Kenya can muster the courage to do the right thing for the benefit of the farmers and not entrenched interests, we already have an exceptional product that the market is declaring a clear winner by the price they are willing to pay.

My hope and prayer is that parliament and the executive do not shy away from doing the right thing to benefit coffee farmers and Kenya. I hope they have a perfect understanding of Kenyan coffee in the international market, its profile and how to take advantage of the opportunities available for the benefit of the farmer and for Kenya.”

Laban Njuguna
Nebraska, USA.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s