Why Did Kenya Coffee Auction Prices for Green Coffee Beans Rise?

After the Nairobi Coffee Exchange reopened, Kenya AA-grade green coffee beans sold for 275 USD per bag of 50 kg, about 15% above the previous 239 USD. AB grade fetched 236 USD per bag, a 1.29% rise. Total auction value reached 5.5 million USD, up from 4.8 million USD in the prior session.

Government reforms aimed at cutting out middlemen pushed prices up, but the coffee industry faces supply-chain strain. Some processing plants without new operating licenses were closed, leaving too little capacity after the cherry harvest. A shortage of certified planting materials, the mpox outbreak and political turmoil added pressure, and export earnings still fell 11.38% year on year.

After the Nairobi Coffee Exchange in Kenya reopened, coffee auction prices rose significantly, with AA-grade green beans fetching 275 USD per bag, a 15% increase from before. Behind this surge are both the direct impact of the government's push for industry reforms to cut out middlemen, and compounded pressures such as insufficient processing plant capacity, a shortage of certified planting materials, the mpox outbreak, and domestic political turmoil. Despite higher prices, coffee export earnings fell 11.38% year-on-year, leaving the industry's outlook full of uncertainty.

After a brief suspension, the Nairobi Coffee Exchange (NCE) in Kenya recently resumed operations, and in the latest auction, coffee transaction prices climbed noticeably compared to before the closure.

According to auction data released by the Nairobi Coffee Exchange, Kenya AA-grade green coffee beans sold for 275 USD per bag (each bag 50 kg), equivalent to about 5.5 USD/kg, marking a 15% increase from the previous 239 USD per bag. AB-grade green coffee beans traded at 236 USD per bag, about 4.72 USD/kg, a slight rise of 1.29% from the previous 233 USD per bag.

It is understood that Kenyan coffee, whether for domestic sale or export, uses a unified grading system. Labels such as "AA" and "AB" are a reflection of this system. Grading is based on bean size and quality, with clear standards, classified in order as AA+, AA, AB, PB, C, E, TT, and T. Strict grading helps ensure the overall quality of the coffee beans.

Higher prices drove the total transaction value of this auction to 5.5 million USD, up from 4.8 million USD in the previous session. The reasons pushing prices up are closely related to the Kenyan government's vigorous promotion of coffee industry reforms in recent years. The reforms aim to raise coffee farmers' incomes by reducing middlemen, so fluctuations in international markets are directly transmitted to local crop production. However, while this change benefits producers, it has also brought some negative effects.

The problem lies in the supply chain, where the post-harvest processing of coffee cherries has encountered many obstacles. During the reform process, some coffee processing plants that had not yet obtained new operating licenses were ordered to close, resulting in severely insufficient processing capacity after the cherry harvest and ultimately causing declines in both yield and quality. Even with current price increases, coffee export earnings still recorded an 11.38% drop.

In addition, the shrinking of Kenya's coffee production is also one of the drivers of rising prices. Earlier reports showed that the Coffee Research Institute (CRI) of Kenya is facing funding constraints, and the long-term shortage of certified planting materials has hindered the development of new coffee plantations. Farmers' access to production materials and extension support has also been limited, all of which is dragging down coffee production.

At the same time, the mpox outbreak has also had an indirect impact. According to reports, this round of mpox has a relatively high fatality rate, with cases reported in 13 African countries, including Kenya. Because vehicles, containers, cargo, and goods all carry contamination risks, traders tend to reduce purchases of goods from African regions, which also poses a disadvantage to Kenya's coffee exports.

Moreover, the finance bill previously introduced by the Kenyan government explicitly proposed raising funds through additional taxes to continue servicing the interest on high sovereign debt. This move sparked public discontent. On June 25, intense protests broke out in the capital Nairobi and several other cities, with clashes between the public and police causing multiple deaths, and the protests have not yet subsided.

Although Kenyan President Ruto has taken a series of measures to try to appease public opinion, including withdrawing multiple tax increase clauses from the new bill and dissolving the cabinet, the government still plans to continue raising some taxes, saying taxation is a necessary means to replenish the national treasury and reduce reliance on external borrowing. The public remains deeply resentful.

At present, Kenya's coffee industry still faces many challenges. Coffee industry insiders believe that, against the backdrop of domestic political chaos, an uncertain industry development outlook, and difficulty in increasing coffee production, prices may continue to rise in the future.

The above content is compiled by CoffeeHunters, a coffee news website.