Kenya has raised the price of its coffee seedlings due to increased demand and high production costs, officials said, a move which may squeeze out small coffee growers who dominate more than half the market. The soaring price of Kenyan coffee has caught the attention of regional producers who are scrambling to cash in on a boom that saw east Africa's largest economy earn around 26 billion shillings ($313.9 million) from exports of it in 2010/11, up from 16 billion shillings a year earlier.
Kenya is a relatively small grower but its specialty beans are famous for their high quality and are valued for blending with those from other countries. "We have reviewed our seedling prices to match demand and increased cost of production," Joseph Kimemia, director of research at Kenya's state-owned Coffee Research Foundation (CRF), told Reuters on Thursday.
The price of seedlings of a new variety of Kenyan coffee named Batian, which more farmers are keen to grow because of its higher resistance to disease, has doubled to 4,000 shillings per kg this month. "We are glad more farmers are taking on varieties like Batian that has immense benefits. It is a positive sign in trying to boost productivity," Kimemia said. The CRF in 2010 unveiled the Batian variety that is resistant to the two worst diseases - Coffee Leaf Rust (CLR) and Coffee Berry Disease (CBD). Researchers estimate Batian could cut production costs by up to 30 percent due to its resistance to these.
CRF said it was receiving orders for seedlings from other countries like Rwanda, Malawi, Zimbabwe, Tanzania and Uganda as well as parts of Kenya like the Rift Valley region that previously did not produce coffee. Data by CRF showed demand for coffee seedlings in 2010/2011 rose to 14.9 million seedlings compared with 2.7 million in 2009/2010. Dirk Sickmueller, managing director at Nairobi-based coffee trading company Taylor Winch Coffee Limited, said the hikes in prices of seedlings will pile pressure on the cost production.
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