Green Coffee Merchants
The first coffee tree in Kenya was planted in 1893 by missionaries. By the 1920s, with the rapid growth in demand for coffee in Europe, coffee had become Kenya’s main export crop. As the industry matured from a colonial experiment to a major industry, various experiments with different types of cooperatives and marketing systems led to the need for regulation and control. In 1933, The Coffee Board of Kenya was established to act as the key regulator of the coffee sector.
As in many colonized coffee-producing countries, much of the final processing was not undertaken at origin. Coffee was shipped to Europe or other continents and traded as parchment. Kenyan growers soon learned that buyers only bought the best qualities and left the remaining coffees unsold in London warehouses. By the 1930s, the growers had realized that the existing system was not taking their interests into account. They began to market their coffees to trading firms with offices in Nairobi and from this local marketing of Kenyan coffee was borne. In 1937 the Nairobi Coffee Exchange started its auctions - a system that has proven especially efficient to promote quality through a bidding system.
The Kenyan highlands historically offer excellent conditions for coffee growing with well-distributed bimodal rainfall, moderate temperatures and rich volcanic soils. The “grand cru” of Kenyan coffees is grown in a triangle north of the capital city of Nairobi on the foothills of Mount Kenya and the Aberdare Mountain range. In the Central Province we find the coffee growing counties of Nyeri, Kirinyaga and Kiambu. Further East and South we have Embu, Meru and Machakos. Coffee production is also found in Western Kenya in Bungoma, Kakamega, Kisii, and the Kenyan side of Mount Elgon, and the Rift Valley area.
Rainfall is dispersed between the “long rains ” between March and May, and the “short rains” from mid-October to December.
Kenya has two crops: a (early) fly crop harvested from June to August are typically from lower altitude and a main (late) crop harvested from October to March and mainly grown in higher altitudes more temperate temperatures.
For mature coffee, a complete production cycle from flowering to fully ripened cherries usually takes eight months. New seedlings, depending on the coffee variety can take 18-36 months to produce their first crop. The Batian, the newest Kenyan variety, for instance, has the shortest maturity period of 18 months. Ruiru 11 and the other traditional varieties such as SL28, SL 34 and K7 take 24 and 36 months respectively. Eight to twelve month is required from flowering to fully ripened cherries.
HARVESTING & PRIMARY PROCESSING
Harvesting and primary processing of coffee are normally parallel activities. Harvesting, also referred to as ‘cherry picking’, involves actual picking (by hand) of the coffee ‘cherry’ from the tree. On the day of picking, cherry is delivered to the estate or cooperative factory or ‘pulping station’. Here, the cherry undergoes primary processing or ‘pulping’ to transform the cherries into parchment, a protective inner shell inside which the green coffee bean is housed.
Primary processing in Kenya is often described as wet, or fully washed, where the outer skin and fruit is removed to reveal the inner shell or parchment. A machine, usually a disc-pulper, is used to remove the skin and some of its surrounding pulp, before the parchment with the sticky mucilage is fermented overnight. The following day, after enzymes have been breaking down the fruit, it is easy to clean off using water. The coffee passes through the washing/grading channels – density is a great measure for quality. The lighter floating parchment is separated from the denser one lying at the bottom.
Finally, the coffee parchment is submerged in water, before it is taken out and spread on raised beds, or drying tables. During drying, the parchment is frequently turned. After a period of sun drying, the coffee is transferred to the conditioning bins where it rests for several weeks. Thereafter, it is moved to the commercial miller for secondary processing.
SECONDARY PROCESSING (MILLING)
After the primary processing is completed, the beans are ready for secondary processing. Secondary processing is the process of removing the dry parchment layer of the beans, also known as hulling. The green beans are categorised into various grades and classifications, and bulking and bagging in preparation for sales.
Once the coffee has been milled, it is warehoused in advance of being sold – either direct to overseas buyers or through the auction. At this point, the sale of the coffee is taken over by commercial marketing agents who are contracted by cooperatives and estates. It is the responsibility of the marketing agent to warehouse and warrant coffee in preparation for auction.
PREPARATION FOR AUCTION OR DIRECT SALE
The marketing agent prepares the coffee for auction or direct sale. This involves collecting, preparing and cataloguing coffee for auction or direct sale to overseas buyers. Samples of each lot are made available to licensed dealers and potential buyers prior to auction or direct sale. There are currently around 50 licensed dealers/exporters.
Kenyan coffee may be sold through two channels;
Auction System: During auction at the Nairobi Coffee Exchange (NCE) the marketing agent is responsible for cataloguing coffee to be auctioned, distributing pre-auction samples to licensed dealers, auctioning the coffee on auction day and preparing invoices following the auction. Approximately 80%(TBC) of total coffee sales is sold through the auction system affirming the system as the preferred channel for coffee sales for most marketers. The season officially opens on the first of October and the auction is held for a cumulative period of 9 months while green coffee beans are available for sale.
Direct Sales: Direct selling, also referred to as the ‘second window’ involves selling of coffee directly to overseas buyers. The marketing agent negotiates with the buyer and a sales contract is duly signed and registered with the Coffee Board of Kenya.
PURCHASE OF COFFEE & PAYMENT
Once the dealer/exporter buys the auctioned coffee, payment is made to the marketing agent within seven days of purchase. The marketing agent in turn distributes coffee proceeds to growers after deducting statutory charges, milling costs and loans owed to financiers by coffee growers where applicable. Payment of coffee through direct sales is made by the buyer upon presentation of the warrant for FOT sales and the bill of lading for FOB sales.
Once coffee has been sold at the auction and paid for, the marketing agent issues a release warrant to transfer ownership to the dealer/exporter. The dealer takes delivery of the coffee from the warehouse and according to its buyer specifications, prepares it for export. The quality of the coffee will be subjected to verification against pre-auction samples and in many cases, additional processing. The dealer/exporter may re-grade, sort and separate the coffee according to individual buyer specifications. Bulking and bagging is the last export activity before the coffee is ready for shipment.
Coffee is moved to the port of Mombasa either by rail or road. Here it is loaded on to a ship and exported to a specific roaster buyer or importer.
In the early 20th century, German colonials planted Rwanda’s first coffee trees in Rubirizi, part of the Rusizi district in Western Province. The initial Rwandan Bourbon Arabica variety took the name of Mibirizi. From here coffee spread throughout Rwanda. Today, Rwanda produces over a quarter million bags and quickly became one of the most renowned suppliers of specialty coffee around the world. The achievement is stupendous and acts as a testament not only to the country’s natural resources and ideal growing conditions, but also to the passion and the heart of the Rwandan people.
Rwanda’s landscape is a mass of emerald mountains interspersed by lakes and rivers. Coffee usually grows at altitudes of 1,600m to 2,200m above sea level. Abundant rainfall and rich volcanic soils make conditions in Rwanda very favorable towards coffee growing.
Much of the land has been utilised for agriculture, with more than 355,000 small scale farmers cultivating coffee on 37,000 hectares of land. Over the last few years, annual production has hovered between 20,000-24,000 MT yearly. Production swings have become less extreme over the last decade due to improved agronomic practices and a slight reduction in the average age of coffee trees. In addition, the volume of fully washed coffee available increased significantly while the volume of natural and semi-washed coffee dropped. This is a reflection of high minimum pricing introduced by the government and intense internal competition between buyers.
HARVESTING & PRIMARY PROCESSING
Harvesting is usually underway by the end of February and continues through to late June for coffee harvested at higher altitudes. Historically Rwanda received a small fly crop in October and November. However, as is the case in many parts of East Africa, climate change is directly impacting the timing of traditional crop cycles due to increasingly erratic rainfall.
During the harvest, red ripe cherries are manually picked and transported to wet mills. Recent regulations have reduced the catchment area of wet mills to a radius of just 5 kilometers. Amongst other things, this has ensured that cherries are processed soon after harvesting improving the quality of the coffee.
Fully washed coffees undergo a wet process, whereby coffee is pulped, fermented and washed to remove sugars prior to being sun dried. Alternatively, the coffee beans can be dried within the cherry to produce a grade referred to as “Ordinaire” for the low quality and “Natural” coffee when it is the result of crafted process to achieve a different flavor profile than the washed
SECONDARY PROCESSING (MILLING)
After producing “parchment” or / and “dried cherry” the coffee is ready for dry milling (also called hulling). After hulling, the coffee is graded by size and separated by gravity. A final manual handpicking can be done to remove unwanted defects prior to export.
WAREHOUSING AND SALES
Unlike Kenya and Tanzania, Rwanda does not have an auction system. All coffees are sold directly by licensed exporters to international buyers.
In Rwanda the coffee dealers have the options to have their own warehouse and / or use the National Agricultural Export Development Board (NAEB)’s warehousing facility.
PURCHASE OF COFFEE & PAYMENT
Cooperatives of farmers often own wet mills where cherries are being processed. Farmers bring their daily harvest to the mills and cherries are being purchased by the kilogram. Often, two types of cherries are purchased at different price levels: the fully ripe ones and less ripe or overripe ones. The distinctions assigned at the point of purchase act as an incentive for farmers to deliver only fully ripe cherries since they are being purchased at a higher price. Payment is generally made directly at the mill at the time the coffee cherries are delivered.
Exports must pass through the NAEB’s warehouses where quality analysis is done to ensure that the declared export quality is reflective of the physical product. All export documents are provided before shipment.
Rwanda’s position as a landlocked country offers up two options for sea freighting. Contracts often reflect shipment from either Mombasa in Kenya or Dar Es Salaam in Tanzania.
Coffee arrived in Tanzania from Uganda. The earliest recorded use in Tanzania is by the Haya tribe from Kagera (North West). The Haya tribe used the beans as a stimulant as well as a currency for trading, which later caused chiefs of the tribe to limit the supply of coffee to maintain value.
The arrival of Germans in the late 1800s transformed the role of the crop. Indigenous populations were initially capped in their allocated production quotas. The arrival of Arabica beans to the Kilimanjaro region changed things again with the Chagga tribe (of the Kilimanjaro / Tanga region) becoming almost exclusively coffee farmers.
When the British arrived after World War I, production around Kilimanjaro continued to grow. The Kilimanjaro Native Planters’ Association (KNPA) was formed in 1925 under the mandate of improving prices for coffee farmers.
After Tanzania became independent in 1964, the local coffee industry continued to prosper until the 1970s. Despite positive political will, the production suffered due to cultural and industrial reforms, and a systemic failure within the co-operatives shifted the industry. By 1977 co-operatives were abolished.
Production languished until the 1990s when the industry saw an injection of efforts from the private sector. The Tanzanian Coffee Board was also reinstated to oversee counterparty risk, the running of auctions and the granting export permits.
ABOUT DORMANS TANZANIA
Dorman Tanzania Limited (DTL) began in 1992 as part of the wave of movement of private business into Tanzania’s coffee sector, being the first exporter to open operations in the country. A year after establishing the company DTL had built the Gourmet Mill in Moshi. DTL started also running parchment buying operations in the South of Tanzania in both Mbinga and Mbeya.
Government reform resulted in the company leaving the South and after many years of absence, Dorman returned through their sister company Coffee Management Services (CMS) following the acquisition of Lima in the 2012/13 season.
In 2013 the ECOM Group acquired a stake in Dorman’s East Africa Business. With this merger came another sourcing entity in Mbinga called Tutunze Kahawa Limited (TKL).
Both CMS and TKL are widely regarded to set a high standard in both the quality and the range of services they offer the farmers in the South of Tanzania. These include training in good agricultural practices, access to agro-inputs, certification training, and implementation. The companies own and manage primary processing units, dry mills as well as searching for better markets for the coffees produced in South Tanzania.
For mature coffee, a complete production cycle from flowering to fully ripped cherries usually takes eight months. New plantings, depending on the coffee variety can take 18-36 months to produce their first crop. The new Compact variety, for instance, has the shortest maturity period of 18 months. N39, KP 423 other traditional varieties take around 36 months to bear fruit.
HARVESTING & PRIMARY PROCESSING
Harvesting and primary processing of coffee are normally parallel activities. Harvesting, also referred to as ‘cherry picking,’ involves actual picking (by hand) of the coffee ‘cherry’ from the tree. On the day of picking, cherry is delivered to the estate or cooperative factory or ‘pulping station’. Here, the cherry undergoes primary processing or ‘pulping’ to transform the cherries into parchment (a protective inner shell inside which the green coffee bean is housed). Primary processing in Tanzania creates either “fully washed coffee” or “semi washed coffee.”
Fully washed coffee is created when a machine, usually a Makinnnon disc-pulper or Penagos eco-pulper, is used to remove the cherries’ skin and some of its surrounding pulp before the parchment with the sticky mucilage is fermented until the sugars have broken down. The coffee then passes through the washing/grading channels (density is a great measure for quality), and the floating parchment is separated from the heavier. Finally, the coffee parchment is submerged in water before being taken out and spread on raised beds, or drying tables. The cup profile for fully washed coffee should be high in acidity, clean and free of defects.
Semi washed coffee is created when coffee is processed at the home of the farmer using a hand powered machine. The skin and some of its surrounding pulp are removed and the parchment with the sticky mucilage is fermented in a container. The coffee is then doused in water to remove the broken down sugars. There is no method for separating the lighter beans unless they float in the bucket. The parchment is then taken out and spread on raised beds, or drying tables. The coffee often displays a fruitier cup but should also be free from defects.
During drying the parchment coffee is frequently turned. After a period of sun drying, the coffee is transferred to the conditioning bins where it rests for several weeks until it achieves a moisture level of around 11.5%.
SECONDARY PROCESSING (MILLING)
After the primary processing is completed, the beans are ready for secondary processing. This phase of removing the parchment is also known as hulling. Secondary processing involves removing the dry parchment layer of the beans, grading the green beans into various grades and classifications, and bulking and bagging in preparation for sales.
Once the coffee has been milled, it is warehoused in advance of being sold, either direct to overseas buyers or through the auction. At this point, the coffee has often been bought by licensed parchment buyers and is held under a warrant.
PREPARATION FOR AUCTION OR DIRECT SALES
This involves collecting, preparing and cataloging coffee for auction or direct sale to overseas buyers. Samples of each lot are made available to licensed dealers and potential buyers prior to the auction or direct sale. There are currently around 20 licensed dealers/exporters. Around 10 of them participate regularly in auctions.
Tanzanian coffee may be sold through two channels:
1. Auction System: During the auction at the Tanzania Coffee Auction (TCA), the Tanzania Coffee Board (TCB) is responsible for cataloging coffee to be auctioned, distributing pre-auction samples to licensed dealers, auctioning the coffee on auction day and preparing invoices following the auction.
2. Direct Sales: Direct selling, also referred to as the ‘second window’, involves selling coffee directly to buyers outside the boundaries of the Republic of Tanzania. The buyers’ and sellers’ contracts are duly signed and registered with the Tanzanian Coffee Board.
N/B: The Auction is held for a cumulative period of 8 months (August/September – March/April). Approximately 60% of Arabica and 5% of Robusta produced in Tanzania are sold through the Auction system. These figures represent the importance placed by the international buyer on the services offered by Direct Sales supply chains.
PURCHASE OF COFFEE & PAYMENT
Once the Dealer/Exporter buys the auctioned coffee, payment is made to the TCB within seven days of purchase. The TCB, in turn, distributes coffee proceeds to producers after seven days having deducted taxes and fees. Payment of coffee through direct sales is made by the buyer upon presentation of the warrant for FOT sales and bill of lading for FOB sales.
Warrants are used as the basis of transferring ownership to the dealer/exporter or the international buyer. The dealer takes delivery of the coffee from the warehouse and according to its buyer specifications, prepares it for export. The quality of the coffee will be subjected to verification against pre-auction samples and in many cases, additional processing. The dealer/exporter may re-grade, sort and separate the coffee according to individual buyer specifications. Bulking and bagging is the last export activity before the coffee is ready for transportation to the designated port.
Coffee is moved to Dar-es-Salaam - usually by road. There it is loaded onto a ship and exported to a specific roaster buyer or importer.