Value Addition in Coffee

Small holder Coffee farmers, Coffee Estates, Cooperatives and Millers in Kenya have a history of selling products at a relatively low market value owing to very limited value addition or none at all. This is not sustainable, as it forces growers to push the land and themselves past a healthy threshold just to survive economically. Sustainable commercial coffee farming has to be about more than just the current business as usual style of doing things. Many in the industry perhaps understand  value addition to mean just putting the raw processed green coffee in a consumer packet and sending it overseas. The concept carries more than just that, marketing what has been packed is what differentiates packing and value addition

In real terms, "Value-addition" is simply anything one can do to raise the value of a product in the market, anything added to it that enables or enhances an increase in the profit margins. Value-added practices normally differentiate between an individual or a company that is economically viable and personally fulfilling, or one that ultimately cannot be sustained financially or economically. These value-added practices should be adopted as a culture in the Kenya coffee industry and it is the key to the future economic sustainability of the Kenya coffee export sector. This culture will enable all players within the entire coffee value chain to advance economically as opposed to the current situation where export of coffee is serving the interests of raw material importing countries in the industrialized markets that Kenya has for long referred to as its traditional export markets.

Value-addition for coffee range from very intricately processed and packaged, to simple additions or processes that can add to the worth of the final product. The Coffee Value addition activities start at the very basic level yet very crucial in determining the final quality of the end product. Such activities include essentials such as appropriate land preparation, fertilizer application, pests and diseases control and management, irrigation, primary processing, secondary processing & facilities maintenance. The following activities are undertaken under each level and stage of value addition. Under Primary processing where over 95% of Kenya coffee is wet processed, the wet method involves the following stages; Sorting/selection; Pulping; Grading; Soaking; Final wash; Skin drying; Final drying & Conditioning.
The current installed milling capacity for secondary processing or milling is 210,000 metric tonnes against the national production 48,000 metric tonnes. The value addition at this stage is the milled Coffee being graded into seven grades (AA, AB, PB, E, C, T, TT). The Tertiary level of Processing and Marketing where also, the largest proportion of value accrues to the roasters, the effort to add value is done by way of Roasting domestically for local consumption as well as Roasting for the export market although the major challenge has been gaining of shelf space in supermarkets in the domestic market as well as stiff competition from established brands; then Export of green beans for roasting at consumption point.

Kenya grows world class coffee, and if it is to be value added to world standards for export, then the facilities doing so must equally be world class. A year or so ago, a story is said of a Japanese beverage dealer who wanted to pack tea in Kenya, but after visiting a few sites upcountry went back home saying there wasn’t a suitable facility. And this is one of Kenya’s biggest handicaps, lack of state of the art packaging facilities to guarantee food safety. Support services like packaging material and paper also need to be upgraded. One can easily pick out from our supermarkets what is packed in Kenya and what is imported.
The second handicap is marketing. Though it is a known fact that as a country we produce some of the finest quality coffee in the world, we should not assume that buyers will always come running for our products. There should be a deliberate effort to capture their attention. Coffee Board of Kenya (CBK) attempted this move about two years ago by unveiling a ‘mark of origin’ for Kenyan coffee. A mark of origin in essence protects value, it doesn’t create it. So industry players need to take the challenge and opportunity presented by CBK and create real value out of the Kenya Coffee brand.

Ways to Add Market Value to Kenyan Coffee

  • Grow organic Coffee - many buyers in the export market  will happily pay 30 -60% more for better taste and health, inline with the emerging trends and lifestyle in the major target export markets.
  • Sell something unusual or hard to find i.e. have a special farm or estate label, or a recognizable brand
  • Sell direct and deliver to high-end consumers such as restaurants and hotels who put a premium on freshness
  • Focus on Coffee as product with unique or special qualities due to the soil in which it is grown, or altitude or special climatic niche

Recent trends in Coffee value addition include: Canned coffee beverages; Ready mix coffee beverage; Coffee-milk admixture; Coffee jelly beverage; Fortified coffee beverages; Fortified coffee drink; Honeyed coffee; Coffee tablet; Freeze dried coffee tablets ; Flavoured coffee; Coffee wine; Candy from coffee beans; Germinated coffee; Cookie formulation with coffee; Coating of frozen pizza with coffee colorant; Carbonated coffee; Decaffeinated coffee; Soluble coffee; Instant hot cappuccino; Coffee paste; Flavoured coffee – the fastest growing area of the market is flavoured coffees which are increasingly becoming popular and now available in more than 150 different coffee flavors like vanilla, nutmeg and various fruit types. Flavouring is done by European roasters and as such the niche offers few opportunities for exporting countries in the developing world like Kenya. Speciality coffee- this market is also growing fast with demand for coffees bearing geographical indications (GIs) on increasing demand. Sustainable coffees - Sustainable coffee is increasingly becoming an important segment of the market offering a lot of new opportunities with a lot of support from European supermarkets and roasters. The four major European certifications for coffee production standards are Fair-trade, Organic, Rainforest Alliance and UTZ certified. The Common Code for the Coffee Community (4C) is a membership association involving coffee producers, trade and industry and civil society. Germany, France and the United Kingdom are Europe's largest markets for sustainable coffee followed by The Netherlands and Belgium.
Value added coffee by-products include: as a Source of dietary fibre; Coffee spirit; Charcoal production; Mushroom cultivation; Production of citric acid and gibberellic acid; Antioxidant compounds; Source of natural food colour; Production of aroma compounds; Biogas production; Sources of phenolic compounds etc
Perhaps everybody is already familiar with some of these practices, but are reluctant to try to charge more than the competitors even though you know your product is worth more. If this is you, remember: it is something of a myth that buyers always want to get the cheapest thing. Most buyers really are looking for the best value for their money, and they know that the cheapest is not always the best. If your product is more expensive than they can get it elsewhere, make sure they understand why. Is it higher quality? Better tasting? A superior variety? Sustainably or organically grown? Crafted by an artist? As long as the value is there, people are glad to get it, and may even choose a higher priced product if they are convinced it is worth it. Building a personal relationship with buyers is also very useful in this process, as is having a recognizable, known farm or estate name.

Value-adding to your products can improve your economic situation, as well as add value to your life. Value-adding to your products gives you room to express yourself more fully, be more creative, to create a personal presence in your products. Marketing more like an entrepreneur than a wholesaler is also a good feeling, as you'll start to feel more in control of your financial life and less at the mercy of the market prices.

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