By Austin Cheboi and Esther Mundia
Introduction
Kenya’s coffee sector is a vital economic driver, contributing significantly to income generation, employment, and foreign exchange earnings. It contributes 0.5 per cent of overall GDP, employs around 30 per cent of agriculture labour force and contributes 10 per cent of agricultural export earnings. Kenya is known for its high-quality arabica coffee, grown by smallholder farmers and large-scale growers organized into cooperatives and estates, respectively. The production system comprises 2,521 large estates and over 800,000 smallholder growers associated with 500 cooperatives. Coffee is grown across 33 counties under rain-fed conditions and irrigation with growing interest in shaded coffee to combat climate change. Coffee value chain involves harvesting coffee cherries and delivering them to mills where pulp is removed and transformed into parchment and dried before sending to 22 licensed millers for processing into clean coffee grades, which are stored and presented at the Nairobi Coffee Exchange for sale. Depending on whether they are operating as estates or through cooperatives, farmers are paid based on the efficiency of marketing agents and buyer availability aiming at optimizing returns. Within the sector, production costs, traditional processing methods, low local consumption and corruption have had far-reaching effects, impacting farmers and employment despite global export status. This blog explores a holistic approach to the sustainable coffee sector while bolstering job creation.
Status of Coffee Sector Value Chain for Job Sustainability Progress of Coffee Value Chain
Jobs in coffee production
In the third Medium Term Plan (MTP) of the Kenya Vison 2030, the country through the “Big Four” agenda aimed at increasing coffee production from 40,000 MT in 2017 to 100,000 MT in 2022 through productivity improvements. The coffee revitalization project under the MTP IV includes the distribution of 600,000 seedlings, 15,000 MT of subsidized fertilizers, and the modernization of cooperatives as interventions to improve the productivity of coffee. With these measures, coffee production area has been decreasing, and production volume and yields have been cyclical over the years. This translates to direct jobs to be created. About 70 per cent of coffee production is under farmers’ cooperatives while 30 per cent is in estates, supporting 1.5 million farmer households directly through income and indirectly by employment.
Figure 1: Coffee production in Kenya (2018-2022)
Source of Data: KNBS (2024), Economic Survey
The Coffee Act (2001) requires cooperatives to pay at least 80 per cent of the sales proceeds to farmers. Also, farmers expect good returns for their produce because of implementation of coffee regulations 2019 controlling multiple licenses. Coffee Exchange Regulations 2020 have seen the number of brokerage companies increased to 25 in 2024, each having employees between 51 and 200. The Coffee Bill, 2023, amended existing laws to enhance the government oversight over the sector. The Coffee Rules (2016) and Trading Rules (2012) regulate sales of quality coffee, leading to increased returns.
Jobs in coffee processing and marketing
The capacity of the coffee sector to create more jobs is within value addition and distribution channels. Coffee relies on traders, management agents (4) and exporters
(77) for global distribution. Though affected by cost inefficiencies and price fluctuations, active operationalization of these institutions has potential for increased employment. The coffee marketing system is dominated by the Nairobi Coffee Exchange (NCE) handling 80 per cent of sales while 20 per cent are direct sales by marketing agencies
(10) and growers’ marketers (25). Most coffee involves wet processing (90%) at washing stations owned by cooperatives (1001) and estates (3000) with (10%) dry processing by the millers. Out of 718 societies approximately 500 are active, therefore providing jobs in coffee brokerage, handling and logistics.
Table 1: Coffee brokerage, societies and exports
| Number of Broker | No. of Societies | No of Coffee Exchange | Exported unroasted coffee(Kg) | Price to farmers(per kg) | Export prices(pe r kg) | Export value | |
| 2018/19 | 659 | 1 | 48735.1 | 302.27 | 416.7 | 10164.8 | |
| 2019/20 | 662 | 1 | 43407 | 443.04 | 512.4 | 10817.4 | |
| 2020/21 | 5 | 673 | 1 | 37504.1 | 658.64 | 697 | 18551.5 |
| 2021/22 | 6 | 688 | 1 | 48301.7 | 488.87 | 768.7 | 27322.4 |
| 2022/23 | 25 | 718 | 1 | 48858.8 | 614.16 | 708.4 | 19888.8 |
Source of Data: KNBS (2024), Economic Survey Challenges to Sustainable Jobs in Coffee Value Chain Price fluctuations and discrepancies
There are discrepancies in coffee pricing to farmers per regions, ranging from 84.6 per cent to 10.2 per cent. This demotivates farmers who are the primary source of jobs in the coffee sector.
Poor management
Limited coordination causes disharmony in the sector. The linkages between the National government and County governments in promoting the coffee sector have slowed down investments, which could boost job creation in the sector. There has been disquiet between the Coffee Board of Kenya, coffee producers and the trader’s associations. Cooperative societies have failed in their roles to manage and promote coffee development, thus hindering access to credit, value addition, marketing and production. This has been attributed to representatives who have inadequate management and financial skills.
The coffee sector involves expensive input, milling, capital and transportation, resulting in supply-demand imbalance. The high production cost has made farmers to shift their focus to alternative activities. This reduces capacity of the sector to create jobs.
Pressure on land
Coffee yields have been fluctuating over time, with more yields from coffee estates. This is attributable to land pressure because of increased human settlement. Conversion of coffee farms to human settlement has a direct impact on the jobs found along the value chain.
Opportunities Along the Coffee Value Chain
Domestic consumption
Direct sales increase farmers earnings by allocating extra income to manage risks and enhancing local and international brand recognition. Also, growing local coffee consumption has expanded coffee shops from 231 in 2019 to 791 in 2024, creating employment. Local coffee consumption has increased from 8,498 bags in 2009 to 55,000
bags in 2024. Government and cooperative initiatives of setting up roaster’s plants have increased opportunities.
Coffee processing value addition
Kenya primarily exports unroasted coffee with only 5 per cent of exports being roasted. With coffee import demand representing 1.1 per cent of global imports to Africa, it presents opportunity for high quality Kenyan coffee, which is prized as premium and speciality product for blending others, thus creating opportunities in grinding and packaging.
Auxiliary opportunities
Coffee industries generate 200,000 tons of pulp daily through wet milling. Pulps can be recycled into organic fertilizers and coffee biomass that can be converted into bioethanol and renewable sources of energy. Tapping these innovations could create jobs while sustaining the environment.
Conclusion and Recommendations
Coffee sector revitalization can enhance employment and build resilience against market volatility. Focusing on the following recommendation can support employment:
- Strengthening local coffee consumption can cushion farmers against price volatilities. This can be enhanced through branding and promotion to ensure the sustainability and profitability. Promoting private roasters reduces the exportation of unroasted coffee, thus improving access to larger market, optimizing returns to the farmers.
- Promoting green jobs through coffee waste utilization for biofuels and manure can strengthen the sustainability of the sector. Climate smart technology could reduce input costs by enhancing productivity and mitigating climate-related risks.
- Encouraging land use optimization through agroforestry practices could improve coffee yields while protecting the environment and offering farmers supplementary income. This ensures sustainable production and stable yields despite pressures on land and fluctuating environmental factors.
