Why supply chain is the Achilles heel for Kenya’s coffee farmers and how Zipporah is helping to break the chains

It’s only through direct trade and simplified supply chain that coffee farmers will strike gold

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BY VICTOR ADAR

The dark memories of coffee farming are still fresh on Zipporah Gatiti’s mind. Growing up, she witnessed her grand mum work hard harvesting coffee berries. But few years down the line it turned out that there was little to smile about as her granny abandoned the cash crop to venture into banana. There was no money in coffee and the payments were always delayed.

In her view, coffee is a highly profitable product, however the farmers in Kenya don’t realise this because they only sell green coffee as an export commodity. She argues that newer market options should be encouraged to fully tap the domestic coffee industry, by primarily putting more efforts in trying to tap into the domestic market for coffee.

“The problem is the supply chain,” she says. “Kenyan farmers were experiencing lower margins and delays in getting paid due to lack of alternative access to other markets. We aim to provide farmers more options to sell and market their coffee so they can get higher margins and better payment.”

Zipporah Gatiti

As always the case, farmers would sell their coffee beans to cooperatives, which will then pass through millers, marketing agents and traders, licensed coffee auctioneers, exporters, and finally to roasters. Ms Gatiti, though, is for the idea that farmers ought to be linked directly with roasters to cut off the many unnecessary “middlemen” who are known to make money without sweat. She realised that coffee beans go through at least five levels of middlemen before reaching the hands of the consumers.

Actually, only about 2.5% of what is paid out trickle down to the farmers. So to help hundreds of coffee farmers look forward to great gains, Gatiti founded Taste of Kenya, a company she set up mainly to simplify the supply chain through direct trade to give farmers direct access to markets in Europe. 

As more and more individuals are slowly trying something different, what is causing concerns is the fact that coffee is not being seen as one of the most attractive investment options to the low and middle-income growers. “This is an issue in the country as a whole,” Gatiti points out. “We have to encourage local consumption of coffee by developing products appropriate for the local market.”

In newer coffee-drinking regions, for example, instant coffee is appealing because of its ability to satisfy the needs of new coffee drinkers and their evolving tastes as per research group Euromonitor International. In Kenya, 80% of coffee lovers drink imported instant coffee instead of locally grown Kenyan Arabica coffee, as there is no conveniently priced fresh coffee product in the market.

“Kenya is recognised as one of the best producers of speciality coffee as the government is involved in the country’s coffee production. However, only 3% of the 50,000 tonnes of coffee produced annually in Kenya is consumed locally,” Gatiti says.

Of course, there has been a cry to offer smallholder coffee farmers better pricing, quick payments after coffee beans are sold as well as direct access to markets. People abreast with the coffee industry say that the fact that foreign players can access coffee without having to link up directly with farmers could be the main root of farmers’ woes.

How most smallholder growers package coffee beans to the markets could also be stifling the sector. Selling just the beans as harvested straight from the farms technically means that one is exporting raw materials.

Due to this, Marek Rohr-Garztecki, permanent representative of the Republic of Poland to UNEP and UN Habitat says Kenya has a closed economy. When he worked as an adviser in the Poland Prime Minister’s office, he did some research to unravel the trouble with this foreign exchange earner. Ambassador Garztecki discovered that although Poland produces a great deal of processed instant coffee, the country imports unprocessed coffee mainly from Germany and Holland, thereby dealing a blow to small holder farmers especially the ones in Kenya, and the larger East Africa. 

“It surprised me,” Garztecki says. “You wouldn’t find any coffee or tea plantations in those countries. It turned out that you have a closed market. Our importers can buy directly from Kenyans but at the same price or higher than that paid by the middlemen. It’s the same for tea, coffee and flowers.” 

The Dutch, so it seems, could be having secret contracts on Kenya’s coffee. Badly needed is the desire to turn things around and put to rest some of the problems bedevilling the coffee business that include not only unstable pricing and fluctuating exchange rates, high cost of production and poverty but also to bury the word “uninformed” farmers, once and for all.

An approach to change

An ideal business is one that allows one to pay bills and live well. In fact, while in business, taking children to school and paying fees, building a modest house, dressing well or buying a car should not be an issue. Since it happens that a good number of those who have laboured in coffee farming are now uprooting their coffee plantations and using the same parcels to plant other crops, or build rental houses, coffee business is not for the faint hearted. Some also dispose off their coffee plantations to those who are able to make good use of them as they try other ways of generating income.

Parts of central Kenya where homes were scattered as coffee plantations took a huge chunk of land parcels are now holding rental houses simply because coffee does not provide a lot for them. Former county government of Kiambu tabled a proposal aimed at controlling land use thanks to a scenario where agricultural land is being turned into real estate and other investments.

It was June last year when the Kiambu County department of land, housing and physical planning announced a plan to regulate land use in order to boost food security. Although the move could affect lucrative investment options such as real estate, small-timer farmers too were really going to jump through hurdles. Despite the circumstances and history of coffee farmers, a lot can still be done to put a smile back on the faces of farmers’ yet to throw in the towel.

“To support the local consumption of coffee we will develop products appropriate for the local market that will be attractive to the domestic coffee industry by locally roasting Kenyan coffee and packaging it for farmers in convenient coffee bags,” says Gatiti.

One of the ways to ensure that investors, especially the small and medium players, gain from coffee farming is putting in place a clear approach to change. Taste of Kenya (which is a product range just like Nestle, or Cadbury’s…) for example, is looking at locally roasting coffee for farmers and packaging it for them at a lower competitive cost. Gatiti says that her firm, which has partnered with Buhler, a Swiss manufacturer for roasting machines, will offer this as a service from March 2018.

“By locally roasting coffee we are encouraging local consumption of coffee in Kenya, ensuring our farmers get better margins for their coffee and creating local jobs for the youth… To revive the sector we as a nation of coffee drinkers need to support our farmers by buying locally grown coffee as opposed to instant coffee which is not always coffee from Kenya,” Gatiti says.