In the six months leading to September, coffee grower Eaagads witnessed a staggering decline of over 99 percent in sales revenue, plummeting to Sh1.1 million from last year’s Sh158.9 million. This alarming revelation coincides with Deputy President Rigathi Gachagua’s intensified reform efforts within the sector.
The sharp decrease in revenue resulted in a net loss of Sh33.1 million for the company, reversing the Sh37.2 million net profit reported a year earlier. Eaagads attributes this downturn in performance to the ongoing government-led reforms, which have adversely affected its ability to engage in direct coffee sales, a traditional practice for the company.
The company stated, “The absence of sales has severely impacted the company’s cash flow, creating a financial gap that required borrowing a substantial sum of Sh108 million. This borrowing has been crucial to covering operational costs, sustaining business continuity, and managing existing financial obligations in the absence of revenue from sales.”
During this period, the company reported a decline in the production of clean coffee to 188 metric tonnes, compared to the 232 metric tonnes generated in the same timeframe the previous year. This drop was attributed to a severe drought experienced from October of last year to March of this year.
“The drought was exacerbated by restrictions on irrigation and followed by a complete ban on any water abstraction from the rivers. Consequently, there was poor crop formation, resulting in small coffee beans and low-grade recoveries for milled coffee, leading to a reduction in volume,” expressed the company.
Despite these challenges, Eaagads anticipates a positive impact on the early crop for 2024 due to the ongoing El Niño rains, in contrast to the period under review. The company has proactively applied for a grower miller license from the Kiambu County government, aiming to facilitate direct sales progression and streamline operations and sales processes.
These difficulties align with a broader push for reforms in the coffee sector, spearheaded by Deputy President Rigathi Gachagua, who oversaw the relaunch of the Nairobi Coffee Exchange (NCE) in mid-August this year.