This document summarizes the global, regional, and local perspectives on coffee problems and policy interventions in Kenya. Globally, coffee is produced in developing countries of the South but consumed in developed countries of the North, leading to price volatility. In Africa, countries have a comparative advantage in coffee production but export prices and total production have declined. In Kenya specifically, high domestic coffee prices coexist with falling production due to market failures and ineffective policies. The document outlines Kenya's policy interventions to address these issues, including legal and subsidy reforms, a cherry revolving fund, upgrading the coffee exchange, promoting youth and domestic consumption, institutional support, direct marketing, and auditing debts. Preliminary impacts include higher prices, farmer empowerment, and

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
2

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
3

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
4

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
5

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
6

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
7

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
8

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
9

10. THANK-YOU
PROF JOSEPH KIEYAH JD PHD EBS
CHAIRMAN, COFFEE SUB-SECTOR REFORMS
IMPLEMENTATION STANDING COMMITTEE
EXECUTIVE OFFICE OF THE PRESIDENT
10