Coffee farmers miss out from global price windfall

…As capacity gaps, low investments stifle industry

Coffee growers in Africa’s most populous country are struggling to reap from high global prices due a number of challenges, including low investments, capacity gaps and poor seed quality.

In contrast, their peers in Kenya, Rwanda and Ethiopia are smiling to the bank, earning foreign exchange while creating more jobs for their people.

Global coffee prices hit 14 month high this month as adverse weather conditions battered harvest in the two world’s largest producers – Brazil and Vietnam – causing a global shortfall of the beans.

The price for Arabica beans, which account for most global production, topped $3.66/lb (a pound), has jumped nearly 15 percent this year. Robusta coffee, a generally cheaper variety used mostly to make instant coffee, rose 0.9 percent to $5,609 a metric ton on Tuesday, according to Reuters.

Nigeria grows both the Arabica and Robusta coffee beans. A kg, which is equivalent to (2.2 pounds) of Arabica, grown mainly in the Mambilla and Jos Plateau, sells between N5,000 and N10,000 depending on the quality.

A kg of Robusta beans, mainly grown in Kogi and Oyo, sells between N3,000 and N5,000 in Nigeria, while a ton goes for an average of N4 million ($2,667). The figure indicates that the Nigerian coffee farmer earns N4.4 million ($2,942) less than their peers in other coffee-producing countries ($5,609 or N8.4 million).

“Nigerian farmers are not benefitting from the global coffee price rally,” Hassan Usman, president of the National Coffee and Tea Association of Nigeria, said in response to questions.

“Local prices are not attractive and it has been a disincentive for us to grow more of the commodity,” Usman said.

Coffee, cotton and cocoa were the country’s main foreign earners in the 1960’s and 1970’s, he said, noting that the cotton particularly has suffered total neglect from the federal and state governments despite its potential for commercial production in Nigeria.

“If truly we want to boost our non-oil, coffee, which is the most consumed commodity after crude oil, offers Nigeria the opportunity,” he said.

Read also: Nigeria’s coffee farmers struggle amid global price rallies

Challenges facing coffee beans

According to him, the sector lacks the structure to grow and attract investments. “You can see what Rwanda, Ethiopia, and Kenya are doing with coffee and tea production,” he noted.

Nigeria’s young population, which constitutes about 63 percent of the country’s 200 million people, are developing a huge taste for coffee products but local production has stalled.

“The country’s coffee production has been on a steady decline with unattractive prices,” said Kayode Oluyole, assistant director and programme lead of the Coffee Research Programme at the Cocoa Research Institute of Nigeria.

“The low prices of the commodity locally are making it difficult for farmers to expand production as they are unable to retain their cost,” he said.

He noted that the low quality of the country’s coffee beans has made it unattractive for local processors to pay premium prices.

He further said that the research institute is training farmers on how to properly handle and process their coffee beans.

“Most of our farmers do not remove the berries from the seed immediately after harvest, instead they dry them together.

“Processors would not pay a premium price for that because they incur an extra cost to remove the dried berries from the beans.”

According to him, most of the coffee beans consumed in Nigeria come from imports from neighbouring African countries and China.

Nigeria’s coffee production, which peaked in the 1960’s, has been on a steady decline, producing 1,844 metric tons of unroasted coffee in 2023, with an average yield of 500kg per hectare, according to the latest data from the Food and Agricultural Organisation (FAO).

According to data from the National Bureau of Statistics (NBS), Nigeria recorded zero coffee exports in the first nine months of 2024.

Ethiopia and Kenya, with fewer populations, produced 559,400 and 53,519 tons of coffee and earned $1.43 billion and $296.8 million from exports respectively last year.

“The government has not invested in coffee production and there are no incentives for farmers to continue to grow the commodity,” said Adeyinka Tekenah, chief executive officer of Happy Coffee.

“The industry hasn’t attracted any investment in the last 10 years,” she added.