Sasini Ltd, a listed agricultural company at the Nairobi stock exchange, surprised everyone by announcing that they intend to turn a 1000 coffee plantation into real estate. This news flabbergasted the market causing the stock price to gain more than 23% on receipt of this news in the stock market the question remains why the excitement at the @NSEKenya.
In my other blog I had written about this issue but as time goes and dynamics change, my opinion changes with it. Investors are simply over excited over this news because the real estate will most definitely increase earnings of Sasini LTD especially in the real estate boom/bubble experienced in Kiambu county.
This trend is so unbecoming. We are seeing very productive farm lands being turned into housing; which is very unsustainable in a country that is a net importer of food.
Don’t get me wrong, I do not support growing of coffee in the most productive highlands in Kenya simply because coffee is not food and middlemen run the show giving coffee farmer peanuts.
I think our best highlands should be producing food that the farmer can sell at the market him/herself without the bureaucratic red tape at the Nairobi Coffee Exchange.
Coffee yields in Kenya have been plummeting in the last 20 years or so as a result of climate change and inefficiencies in the value chain. The International Centre of Insect Physiology and Ecology (icipe) has scientific evidence suggesting that the coffee borer populations will increase as a result of climate change. The coffee borer is known for damaging the whole coffee tree causing yields to fall sometimes negligible.
Another thorn pricking the coffee farmer in Kenya is the middlemen. They buy coffee beans for very low prices from the uninformed farmer sometimes as low as Kes 20/kg or USD 0.21 and go and sell for over Kes 200/kg or USD 2.10.
These unfair circumstances has caused farmers of all scales to uproot their coffee trees and venture into more profitable enterprises like real estate development.
The real estate boom/bubble in Kenya is largely caused by a massive under supply of housing units and the saga continues. People are converting good arable land into real estate; this is enough reasons for people to invest in agriculture now, because our food supply is decreasing, causing prices to go up; making agriculture a very profitable business, don’t you think? Please share your wise thoughts on the comments section below….