Fair Value Distribution Analysis in the Coffee Sector: A Research to Advocate for Policy Changes in Kenya and Uganda

Overview

Fair Value Distribution study under Reclaim Sustainability!, looking at how value is shared and what sustainable consumption looks like in the coffee sector of Kenya (Bungoma, Nandi, Trans Nzoia, Machakos, Nyeri, Kirinyaga) and Uganda (Masaka, Wakiso, Kapchorwa, Sironko, with Mubende planned). It covers smallholder and estate farmers and sector stakeholders. It looks at bottlenecks to equitable profits, gender and youth constraints, the most profitable chain nodes, business models, domestic consumption, market access and ongoing advocacy, to set policy advocacy priorities.

Key findings

• Farmers in the survey named their main constraints as pests and diseases (80%), low and fluctuating prices (62%), fertiliser cost (58%), pesticide cost (56%), climate change (44%) and limited training (32%).
• Most farmers sell at the lower nodes (cherry or parchment after primary processing). Value and profit rise with each node, and the highest value comes from branded, packaged roasted coffee.
• A Kenyan farmer earns a margin of US$0.08 per kg of red cherry, against US$0.15 in Uganda. Kenya's higher production costs come from expensive inputs and labour. In Uganda, red cherry (margin US$0.15) pays more than dried Kiboko (US$0.11).
• Farmers who roast could earn margins of US$9.6 per kg in Kenya and US$6.6 per kg in Uganda.
• Cherry payments to Kenyan smallholders in 2021/22 ranged from KES 118.60 down to KES 10.00 per kg depending on the cooperative or factory, a 91.6% deviation.
• Men are the main decision-makers on coffee income in Uganda (52% on small-scale farms, 47% on estates) more often than in Kenya (22% and 32%). Kenya has more joint decision-making (58% and 57%). Women face limited access to land, credit and leadership.
• Kenya's domestic coffee consumption rose from 1.26% of production in 2011/12 (629,500 kg) to 4.81% in 2020/21 (1,655,850 kg). Neither country has a national digital marketing platform, and coffee is sold mainly through auctions.

In figures

Recommendations

• Raise production and productivity through extension and training, collective input purchasing, government action against counterfeit inputs and for affordable inputs, coffee-specific credit, and better access to improved planting material.
• Increase women's and youth participation through an integrated family coffee enterprise approach, voluntary land and output-sharing agreements, leadership roles in farmer organisations, and enterprises with quick returns for youth.
• Promote domestic consumption through informal vendors, mini coffee shops, cottage processing around common user facilities, and campaigns in schools and on local media.
• Help farmers adopt place-based climate-smart practices, and create government frameworks that reward their adoption (for example carbon credits and certification).
• Promote business models that move farmers up the chain: innovative coffee products, origin and GI branding, contract farming, roasting at origin, agritourism, private collection auctions, subscriptions, and common value-addition facilities with market linkages.
• Improve market conditions through enforceable legislation and regulation, and fund research and development, including coffee research institutes.

Methodology

Concurrent nested mixed-methods design: desk review, 32 key informant interviews, 18 focus group discussions (6 women-only, 6 men-only, 6 mixed; 9 per country), and a face-to-face Kobo survey of 595 coffee farmers (Kenya 300, Uganda 295) drawn by multistage sampling against a minimum of 576. Analysis used STATA, SPSS, Excel and NVivo.

Limitations

• Mubende District in Uganda was left out of the farmer survey because of the Ebola outbreak.