The need for the beneficiation of coffee exports in Kenya in order to improve economic performance

Chesire, Milly C. (2005-12)

Thesis (MBA (Business Management))--University of Stellenbosch, 2005.

Thesis

ENGLISH ABSTRACT: Kenya has historically depended on its coffee industry as a major contributor to foreign exchange earnings and farm incomes. Between 1975 and 1986, coffee was Kenya's leading foreign exchange earner, contributing over 40 percent of total foreign exchange earnings. But since 1988, the Kenya coffee industry has undergone a rapid decline, characterised by very low export earnings, a huge decrease in production and productivity and consequently, increased poverty amongst coffee farmers. By 2000, it contributed only 10 percent of total foreign exchange earnings. This decline has arisen due to the global coffee crisis, in other words, the persisting large imbalance between supply (production) and demand (consumption), that has led to a major collapse in world coffee prices. Given the fact that the coffee crisis is expected to persist for several years to come, this study attempts to formulate coffee industry proposals that would lead to the optimisation of Kenya's coffee potential, as well as increased international competitiveness. Towards this end, it evaluates the intricate supply and demand patterns in the world coffee market to try to identify where the opportunities lie. It is found that even though the overall demand for coffee is growing slowly, there is an emerging niche or specialty coffee market that has arisen owing to new consumption patterns and increased awareness and preference by consumers of premium coffee origins. This niche market offers a route to rising standards of living to farmers, such as those in Kenya, who grow premium quality coffees. It is recommended that Kenya should pursue intense value addition of her coffee to enable her capture a bigger portion of her export sales. Similarly, Kenya will need to alter her production and marketing strategy to feed the emerging niche market instead of the mainstream market, as is currently the case. Furthermore, it is suggested Kenya should strive to increase domestic consumption, which is currently negligible. Other proposals that will support increased competitiveness of Kenya's coffee industry include reducing the cost of coffee production and improving the efficiency and performance of producer organisations.

AFRIKAANSE OPSOMMING: Kenia is baie afhanklik van hul koffie-industrie aangesien dit 'n wesenlike bydrae tot die land se buitelandse valuta en binnelandse boerdery-inkomste lewer. Tussen 1975 en 1986 het koffie die meeste buitelandse valuta vir Kenia gegenereer. Hierdie prestasie kon egter nie volgehou word nie en sedert 1988 het Kenia se koffie-industrie agteruit geboer. Hierdie tydperk is gekenmerk deur verlaagde uitvoerverdienstes, en afnames in produksie en produktiwiteit wat grootskaalse armoede onder koffieboere teweeg gebring het. In 2000 het koffie-uitvoere slegs 10 persent van Kenia se buitelandse verdienstes bygedra. Hierdie negatiewe tendens is veroorsaak deur die globale koffiekrisis, oftewel die wanbalans tussen vraag (verbruik) en aanbod (produksie), wat internasionale koffiepryse tot baie lae vlakke gedryf het. Aangesien dit blyk asof die globale koffiekrisis vir nog 'n hele paar jaar sal aanhou, gaan hierdie navorsingsprojek poog om voorstelle vir Kenia se koffie-industrie te formuleer. Die voorstelle is gemik op die optimalisering van Kenia S8 koffie-industrie en om die land in staat te stel om internasionaal te kompeteer. Die navorsing evalueer ook die heersende intrinsieke patrone van vraag en aanbod in die wereld koffiemark en probeer om geleenthede te identifiseer. Dit is byvoorbeeld bevind dat alhoewel die totale vraag na koffie wereldwyd stadig toeneem, daar ontluikende nismarkte vir spesiale koffies onstaan het as gevolg van nuwe verbruikspatrone, asook 'n toenemende bewustheid van top gehalte koffie. Dit is veral verbruiksvoorkeure vir topgehalte koffie van 'n spesifieke gebied van oorsprong wat baie relevant is vir Kenia en dit is juis hierdie nismarkte wat 'n guide geleentheid bied aan Kenia se topgehalte koffieboere. Dit word dus aanbeveel dat Kenia op waardetoevoeging tot hul bestaande koffiebronne fokus, wat groter buitelandse valuta teweeg kan bring. Kenia sal egter hul produksie- en bemarkingstrategiee dienooreenkomstig moet aanpas om die fokus van die hoofstroom koffiemark na die ontluikende nismarkte te skuil. 'n Verdere voorstel is dat Kenia sy plaaslike koffie-verbruik vergroot en stimuleer aangesien dit tans baie laag is. Ander voorstelle wat Kenia se mededigingsvermoe in die koffiemark kan verbeter, sluit in inisiatiewe om produksiekostes te verlaag, asook om die effektiwiteit en prestasie van produsente-organisasies ta verbeter.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/5767
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