AGRODEVAgricultural Growers Resource Organization

Developing Economic Viability

Founded in March 2005

We are a Kenyan Based NGO working hand on with farmers to

build strong and sustainable agribusinesses

MISSION

To promote development and innovation in Kenya’s agriculture sector by creating niche markets, encouraging sustainable practices,

creating employment in and out of the agriculture sector, building infrastructure,

linking growers directly to global markets, and creating education and awareness on value

added initiatives.

Our Board of Directors

• Lawrence Njeru holds a BSc. in Agriculture from Western Michigan University. He has worked with the United States Department of Agriculture. Lawrence and the Njeru family have a long standing history of innovation in the Meru and Embu region of Kenya. Lawrence is a Kenyan citizen.

• Blake Hanacek holds a BSc. in Global Resource Systems from the Faculty of Agricultural Science at the University of British Columbia. He also holds a Masters of Watershed Management from the Resource Management and Environmental Sciences Faculty at UBC. Blake holds dual citizenship in Canada and the USA.

• Richard Damianopoulos holds a BA(hons.) in Political Studies from Queen’s University in Kingston, Ontario. He also holds a MA in Political Science from the University of British Columbia. His thesis focuses on the political economy of the coffee industries in Kenya and Uganda. Rich is a Canadian citizen.

CURRENT PROJECT GOALS

•To alleviate rural poverty by provide an avenue for rural coffee farmers to access “sustainable” export markets. •Our first target area is the Meru region around the slopes of Mt. Kenya. This region is unique as one of the top coffee growing regions in the world.

WHY COFFEE?

• Coffee is the second most widely traded commodity in the world (petroleum is the first)

• It is produced in more than 50 nations. Of the 7.5 million tons of coffee produced worldwide, only 25% is consumed by the producing countries themselves.

• It is one of the largest employers in the agricultural sector of developing countries.

• It is relied upon as a major source of revenue in producing countries.

THE GLOBAL RURAL COFFEE SITUATION

• Post International Coffee Agreement (1962-1989), liberalized international coffee market

• Elaborate value-chain structure

• Old control structures no longer relevant in new liberalized market

• Coffee farmers have been faced with plummeting world market prices over the past 20years.

• Trading is dominated by spot markets, lack of trust, and opportunism.

• After fall of ICA producer percentage of total coffee income fell from 20% to 13% to now an all time low of 7% and lower.

Coffee Area Harvested in Kenya and Uganda

0

50000

100000

150000

200000

250000

300000

350000

198019831986198919921995199820012004Year

Area Harvested in Hectares

(Ha)

Kenya Coffee AreaHarvested Ha

Uganda Coffee AreaHarvested Ha

•Coffee area harvested in Kenya has increased by 66%

•Coffee area harvested in Uganda has increased by 18%

•Data appears to suggest that coffee yields and production should have increased as well; however, this is not the case

Coffee Yields in Kenya and Uganda

0

2000

4000

6000

8000

10000

12000

198019831986198919921995199820012004Year

Coffee Yield in

Hectograms/Hectare (Hg/Ha)

Kenya Coffee YieldHg/Ha

Uganda Coffee YieldHg/Ha

•Since 1980 coffee yields have decreased by 57% in Kenya

•During same period, coffee yields in Uganda increased by 17%

Green Coffee Production in Kenya and Uganda

0

50000

100000

150000

200000

250000

300000

350000

19801984 1988 19921996 2000 2004

Year

Coffee Production in Metric

Tons (Mt)

Kenya Coffee, GreenProduction Mt

Uganda Coffee, GreenProduction Mt

•Kenyan coffee production has decreased by 30% since 1980, and by 38% since 1990

•Ugandan coffee production has increased by 38% since 1980, and 44% since 1990

SPECIALTY COFFEE VALUE CHAIN

• Growers are receiving only 7% of the coffee revenue

• Over 80% of the value added is made in the consumption country not the production country

2% 1%1% 2%

54%

33%

7%

Cooperative Marketing Agent/Miller/LeviesExporter ImporterRoaster RetailerGrower

Dealers

NCE

Marketing Agents

Millers

Small Estates

Estates

Cooperative

Dealers

NCE

Marketing Agents

Millers

Small Estates

Estates

Cooperative

KCDA (CDU)

Physical flow of coffee Financial flow

Kenya European CommissionTask Force Recommendations

Existing Recommended

Kenyan Coffee Trends

• Coffee was the number one export for Kenya, earning 45billion Ksh but now it is fourth earning only 5billion Ksh per year

• The number one export receives 40billion Ksh per year (Tea) which is liberalized

• Coffee production has dropped by over 50% in the last ten years

• Kenya produced a peak of 128,941.00 tons of coffee in the 82/83 growing season

• The 2005/2006 season is projected to yield 55,000.00 tons

Why the Decline?

• All green coffee for export must be sold at the Kenyan Coffee Board’s auction house (heavily controlled by politics)

• Farmers must wait 9-12 months before they receive complete payment from their crop forcing them to borrow their own money and pay interest on it

• Unstable market prices force farmers to chase global commodity markets

Need for Change

• Falling prices require immediate action on a grass roots level

• Value added initiatives have been introduced, to help with the coffee crisis, in other producing countries but not Kenya

• Organic, Fair Trade, Shade Grown, Bird Friendly, i.e. “sustainable coffees” have seen large market share growth globally and have been attributed for saving many communities dependant on coffee production

How Do Sustainable Coffee’s Help?

• Direct purchasing• Guaranteed price minimum• Transparency and communication down the

production chain• Community stewardship• No dependence on synthetic additives

(fertilizers, pesticides, herbicides)• Ecologically friendly growing practices

How Does AGRODEV Help?

We will work towards our goals by developing a network of skilled advocates and

professionals and through collaboration with international donors, governments, and the

private sector. As a team we will work together to develop long-term guidelines to

enhance development and create value added initiatives in the Kenyan agricultural sector.