Arabica coffee prices drop
May 18, 2012
Arabica coffee prices have plunged into an all-time low, trading at sh5,300 per kilogramme of premium parchment, about half the price it cost the same period last year.
By Daniel Edyegu
Arabica coffee prices have plunged into an all-time low, trading at sh5,300 per kilogramme of premium parchment, about half the price it cost the same period last year.
Premium parchment traded at sh10,000 last December before prices took a nose dive to sh7,500 per kilogramme in February.
The ordinary parchment is trading at between sh3,500 and sh4,000 per kilogramme, depending on the quality.
The drop comes at the peak of the dry season when coffee farmers are picking remnants of red cherries from the main season.
The price drop is attributed to low Arabica coffee demand at the world market. This has affected coffee traders and farmers who made bulk purchases of stock expecting prices to escalate during the dry season.
The traders have subsequently resorted to hoarding the stock with the hope that prices may rise again.
James Musimbi, 42, a coffee farmer from Bwagogo sub-county, Manafwa district, explained that the drop had demoralised coffee farmers and traders.
“I purchased 1,000kg of parchment last December when farm gate prices were at sh7,000 per kilogramme. I also stored another 300kg from my plantation, expecting prices to rise.
“All my stock is intact. I can’t sell it now because I would incur huge losses,” Musimbi said.
He said with the new season expected to start in August, the low prices might discourage farmers from selling parchments.
“Coffee can be stored for two years without getting spoilt. Presently, farmers who are selling off stock, are doing so to earn money for fees to take back children to school,” Musimbi said.
Except for Kyagalanyi Coffee Ltd, a local coffee export firm, and Bugisu Cooperative Union, most firms have halted purchases for parchment.
Kyagalanyi Coffee spokesperson Umar Maleh said the major purchasing firms cannot easily halt purchases or selling parchment due to standing agreements and price fluctuations.