A new direct coffee marketing system in Kenya that was meant to boost farmers' income has yet to pick up due to market access constraints, the Coffee Board of Kenya said on Thursday.
Growers had demanded the so-called second window system, believing it would bring better returns than traditional auctions. But since it was set up in mid-2006, the system has led to the sale of only 2,623 60-kg bags.
"It has not picked up on the side of growers although it was meant for them," Bernard Gichovi, a senior board official, told Reuters. "One grower marketing agent has moved 1,080 bags, while other commercial agents moved 1,543 bags."
Authorities licensed 12 commercial and 32 grower-marketing agents. Only four commercial and one of the grower marketing agents have so far been able to exploit the system that cuts out merchants who would have eaten into auction earnings.
"We are trying to free people from the grip of the bigger boys, but they lack the capacity or the know-how so they are running back to the big boys. They need a lot of education to play with the big boys," Gichovi added.
Smallholder farmer societies needed to pool resources and volumes in order to gather market intelligence and attract the attention of roasters, he said.
Only two areas in the Mount Kenya growing region had formed groups with the critical mass needed, he said the Mere Central Union and the Magma Co-operative Union in Mooring's.
Gichovi said the weekly auction remained the best price discovery mechanism. AA grades have fetched prices as high as $350 per 50-kg bag in the past couple of months, with prices tending to rise due to the high quality arriving at the sale. Kenya produced 48,297 tonnes of coffee in the 2005/06 (October-September) season and earned 8.7 billion shillings ($127 million) from exports compared with 45,245 tonnes in the 2004/05-crop year and 8.2 billion shillings of exports.