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February 21, 2011

Kenya boosts coffee fund size to raise production

by Fred Ojambo

Kenya, East Africa’s largest economy, increased the size of its revolving fund for coffee farmers by 25 percent this year in an effort to boost production and improve quality, according to George Ooko, chief executive officer of the Coffee Development Fund.

The fund was increased to $15 million from $12 million last year because of increased government funding and helped by interest payments accruing from loans to farmers, he said in an interview today in Arusha, in neighboring Tanzania.

Kenya started the fund in April 2007 with an initial $10 million to help small-scale farmers revive production which dropped from more than 100,000 metric tons in 1988-89 because of a slump in global prices and farm mismanagement. The fund aims to help farmers buy fertilizers, pesticides and equipment.

Kenya may produce 40,000 tons of the beans during the 12 months to Sept. 30, down from a previous forecast of between 49,000 tons and 55,000 tons, according to James Wahome, quality manager at the Coffee Board of Kenya. The country produced about 45,000 tons last season.

Coffee sales through the Nairobi Coffee Exchange are also increasing as farmers fail to take advantage of direct sales, said Isabella Nkonge, chief technical and regulatory services manager at the board, in an interview in Arusha today.

Sales through the exchange rose to about 91 percent of the total last year, from 85 percent in 2008-09, she said. Direct sales were introduced in 2005 after farmers complained that the exchange had a monopoly on exports.

“The share of direct sales has dropped because some farmers couldn’t meet the desired volumes and requirements like certification,” Nkonge said. “Even then, farmers were still depending on marketing agents to handle their deals.”

Businessweek

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