Coffee or Real Estate?

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. Real estate

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.

Climate Change

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….

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6 thoughts on “Coffee or Real Estate?

  1. Its a pity as a country we are shifting from agriculture to real estate at the expense of food crop, making money in the short term but as a country loosing in the long. Years to come agriculture will pay well do to scarcity of food crops due to reduced crop acerage. Now is the time to venture into efficent n intesive farming

  2. Pingback: The Agriculture Investment Case | The Young Agropreneur

  3. Its sad that this big companies are losing faith on agriculture. The other day i when i was doing shopping a 250g Tin of Dormans coffee goes for Ksh550. From your price comparison of coffee beans you can see the profit margin. Agriculture is and will always be profitable..need to be taken seriously and do it on large scale if possible. The well to do and respected people in the UK ,Australia,US are farms by the way. On that note see you at the ASK Show next week.

  4. Very true Louis, agriculture is very profitable, just need some seriousness and efficiency. About large scale farming; it can be a bit hard due to the massive land subdivision in Kenya but then again small scale farmers can still meet our needs and have surplus for export, if the right measures are taken. Thanks for the comment and see you at the ASK show indeed 🙂

  5. My first time to visit this blog.The info is very important.As a Kenyan I know what internal security and financial security is. But importantly we have by fate evrybody knows the importance of a Contry’s FOOD SECURITY.
    Thanks
    Munene Mugera

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