Tag: Nairobi Coffee Exchange

Kenya’s coffee production is set for a steady recovery, with FAS Nairobi forecasting a 12 percent jump to 950,000 60 kilogram bags in the 2026/27 marketing year. The increase is attributed to new harvested area, improved crop care, and farmers’ ability to reinvest after two years of sustained high market prices. Growers now have the capital to apply more consistent fertilizer and control pests and diseases that often limit yields.

Coffee farms in the key Mount Kenya region flowered robustly following the severe drought that lasted until March 2026. The harvested area is projected to increase marginally to 106,000 hectares as recent plantings mature. Exports are expected to reach 940,000 bags, while domestic consumption is likely to remain flat at 62,000 bags due to reduced purchasing power and disruption of urban coffee culture.

Coffee Expansion Program and Regulatory Changes

Kenya is pursuing an aggressive coffee expansion program across the Central, Eastern, and Rift Valley regions. The initiative is being channeled through the New Kenya Planters Cooperative Union, which uses a government supported revolving fund to provide farmers with saplings and fertilizers. Several county governments have also launched localized grant programs to help farmers offset expansion costs.

The expansion has tested the country’s capacity to produce planting materials. The Coffee Research Institute faces a massive backlog despite efforts to ramp up production. In March 2026, Kenya enacted a new Coffee Act that transfers regulatory oversight from the Agriculture and Food Authority to the revived Coffee Board of Kenya. The law also establishes an independent Coffee Research and Training Institute, separate from the Kenya Agricultural and Livestock Research Organization.

The new law codifies several reforms that have been ongoing since 2022, including the reorganization of the Nairobi Coffee Exchange and the establishment of the Direct Settlement System, a digital payment platform enabling direct, transparent, and faster payments from buyers to coffee farmers. Licensed brokers now handle coffee classification, sale catalogues, and both auction and direct sales. Licensing of coffee millers has moved from the Agriculture and Food Authority to county governments.

Production and Area Trends

Over most of the last decade, peri-urban coffee growing areas underwent systematic uprooting to make way for residential housing, driven by demand for urban expansion. This trend was particularly rampant around Nairobi, Thika, Kiambu, and Nyeri. In the last two years, the trend has slowed due to significant stagnation in the real estate market. However, without a clear land use policy to safeguard arable land, analysts see this as a temporary reprieve that could reverse if coffee market prices slump.

Marketing and Price Trends

Roughly 80 percent of Kenya coffee is sold through producer cooperatives, with the remainder managed by corporate and individual estates. The Nairobi Coffee Exchange, a spot market founded in 1935, facilitates over 95 percent of coffee sales. Other transactions occur through direct contracts between producer agents and exporters. The Capital Markets Authority has licensed 16 coffee brokers for the exchange, of which eleven are farmer owned cooperatives or unions. Fifteen brokers actively traded during the 2025/26 season.

Average coffee prices at the exchange surged since MY 2024/25 due to tight global supply. This situation is expected to correct due to a projected two percent increase in global coffee production for 2025/26. In April 2026, the average price fell to $268.77 per 50 kg bag, marking a 28.4 percent drop from $375.24 in October 2025. The exchange trades in US dollars, and the Kenyan shilling’s stability at roughly 129 shillings per dollar has been key in keeping local producer returns steady.

Export Destinations and Trade Shifts

The United States remains Kenya’s dominant coffee export destination with 17.2 percent market share, recovering from a sharp decline in MY 2023/24. Belgium has shown consistent growth, doubling its volume over three years from 4,021 metric tons to 8,763 metric tons. France and Canada have followed rapid expansion paths. Germany, once holding nearly 18 percent of the market, has seen its volume erode to 7,173 metric tons or 12.7 percent. Sweden experienced a dramatic downturn from 9.5 percent market share to just 4.0 percent.

Kenya has launched traceability mechanisms to comply with the European Union Deforestation Regulation. Larger export firms must meet these requirements by December 30, 2026, while smaller enterprises have until June 30, 2027.

Domestic Consumption and Tourism Impact

Domestic coffee consumption is projected to plateau at 62,000 bags in MY 2026/27. Intense inflationary pressures are straining purchasing power, making coffee less accessible to average households. The proliferation of coffee houses and service outlets in Nairobi and other major cities has lost momentum. This decline is largely tied to the departure of several major non-governmental organizations and the withdrawal of key donor operations. These organizations historically supported the urban middle class and expatriate communities that formed the backbone of the high-end coffee market. Their exit has left a void in demand.

Kenya’s tourism industry, a primary driver of coffee consumption through tourist hotels and lodges, is facing a slowdown due to rising travel costs for local and international visitors. This downturn supports the outlook for a stagnant domestic coffee market.