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Financing Coffee Farmers in Kenya: Challenges & Opportunities

A presentation By John Amimo Resource Mobilization Officer, Coffee Development Fund

During the FAST Executive Breakfast Meeting at BOMA HOTEL, Nairobi, 30 th July, 2012

Outline • • • • • • The Coffee Development Fund: Business Profile Coffee Outlook: An Overview The Financial Landscape of the Coffee Sector in Kenya Risks & challenges in coffee sector financing Turning Risks into Opportunities Conclusion

Coffee Development Fund: Business Profile BUSINESS CLIENTS SERVICES/ MANDATE FUND SIZE IMPACT ELIGIBILITY FINANCING COFFEE FARMERS SMALL HOLDER FARMERS/ESTATE FARMERS/COOPERATIVE SOCIETIES PROVIDING ACCESSIBLE, AFFORDABLE CREDIT AND FINANCIAL SOLUTIONS TO THE COFFEE SECTOR $USD 13 MILLION 68,245 COFFEE FARMERS COFFEE FARMERS WITH A PRODUCTION RANGE BETWEEN 0.5 - 3 KG OF CHERRY/TREE

Coffee Outlook: An Overview • •

At Micro-Level

Coffee production in Kenya has stagnated at around 40,000MT in the last 5 years Export earnings continue to rise despite a dip in production. In 2006/2007 season = Ksh 8.7 Billion received in Export earnings In 2010/2011 season= Ksh. 22 Billion received in Export earnings • • Focus shifting from traditional coffee growing areas (Central) to other non-traditional areas (Rift Valley) Local domestic consumption on the rise as evidenced by number of coffee houses opening up in urban towns

Coffee Outlook: An Overview • • • •

At Macro-Level

The past five years, global production has been rather erratic compared to consumption which has been increasing slowly but steadily Production interruptions mainly due to frost, leaf rust and change of crop cycle among the world leading producers Supply and demand interruptions attributed to the continued volatility in coffee prices.

Coffee farmers in producing countries continue to experience ‘highs’ and ‘lows’ in pricing of their produce

The Financial Landscape of the Coffee Sector in Kenya

Risks & Challenges in Coffee Sector Financing

Risks & Challenges in Coffee Sector Financing (Continued)

• • • • • • Turning Risks into Opportunities A more holistic approach required in coffee sector financing Establishing relationships with farmers is key Understanding farmers risks and challenges should be the starting point. Farmers respond better when financiers are able to articulate and offer solutions that meet their needs Strengthen capacity of staff in Agri-finance or alternatively recruit staff with agricultural backgrounds Develop mechanisms for knowledge management within financial institutions

Conclusion

Food for thought

Devolved system of governance an opportunity?

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