Prof Kieyah presentation - The Kenya Coffee Reform Agenda

1. COFFEE PROBLEM: GLOBAL, REGIONAL &
LOCALLY PERSPECTIVES
PROF JOSEPH KIEYAH, MA, JD, PHD, EBS
CHAIRMAN, COFFEE SUBSECTOR REFORMS IMPLEMENTATION STANDING
COMMITTEE, EXECUTIVE OFFICE OF THE PRESIDNT
AFRICA COFFEE SUMMIT
SAFARI PARK HOTEL, NAIROBI, KENYA
25TH – 27 MAY 2022

2. GLOBAL PERSPECTIVE
 Stylized facts
 long gestation period (3 years)
 long producing life ( 28 years)
 coffee is produced in the South (third world) but
consumed in the North (1 and 2 world): must be
exported
 Coffee Problem: PRICE
INSTABILITY/VOLATILITY
 Why? Demand and Supply of Coffee are price
inelastic
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3. AFRICA REGIONAL PERSPECTIVE
 Africa has comparative and competitive
advantage in coffee production yet its total
coffee production has been steadily declining
 FOB export price
 Africa coffee price receive 50 -70% compare with
Brazil and Vietnam which over 90%
Root cause: internally inefficiency
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4. KENYA’S PERSPECTIVE
 Paradox: High Price and decline production
 Why?
Market Failure and policy ineffectiveness
 Why intervention? Coffee is a strategic
commodity
Coffee is an anchor of sustainable rural
development
 Foreign currency earner
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5. POLICY INTERVENTIONS
o Farmer-centric Coffee Reforms
o Pillar 1: Legal Reforms:
o The Crops (Coffee) General) Regulations 2019
o The Capital Markets(coffee exchange regulations 2019
o Objective: To protect farmers’ property rights
o Status: Done
o Pillar 2: Coffee Subsidy Programs
o Objective: Reduce production costs
o Status: 1.4 Billion World Bank project
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6. POLICY INTERVENTIONS.
o Pillar 3: Cherry Revolving Fund
o Objective; Addressing Cash-flow problems
o Status: 3 billion Cherry advance fund directive
o Status: Done
o Pillar 4: Modernization of NCE
o Objective: enhance transparency
o Status: NCE has been upgraded
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7. POLICY INTERVENTIONS
o Pillar 5: Promote Youth Participation & Domestic consumption
o Objective: Strengthen Intergenerational link
o Status: proliferation of cafes
o Pillar 6: Institutional support
o Objective: support enforcement regulations and standards
o Status: minimum support
o Pillar 7: Market Kenyan Coffee
o Objective: Increase market share & minimize monopsony
problem
o Status: counties marketing initiative; Direct sale to South Korea
o Pillar 8: Audit Debts and Debt Waivers
o Objective: Free the farmers from odious debt
o Status: work on progress
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8. PRELIMINARY IMPACT
 General increase of the Coffee Prices
 Historical payout to coffee farmers
Empowered Coffee Farmer
 Historical direct sale to South Korea
Alignment of interest of the coffee owners
and private actors
 Farmers heightened awareness of their rights
 Enhanced transparency on payout to farmers
 Uptake of digitalization
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9. TAKE AWAYS
 POLICY IMPLEMENTATION QUESTION
 VARIABLE/PARAMETER?
INCREASE DOMESTIC CONSUMPTION
 TO MITIGATE PRICE INSTABILITY
 INCREASE INTER-REGIONAL TRADE
 TO MITIGATE MONOPSONY PROBLEM
 COMMITMENT TO EMPOWER IACO
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10. THANK-YOU
PROF JOSEPH KIEYAH JD PHD EBS
CHAIRMAN, COFFEE SUB-SECTOR REFORMS
IMPLEMENTATION STANDING COMMITTEE
EXECUTIVE OFFICE OF THE PRESIDENT
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