zlacker

Growing up in Nairobi, it took only a 20-minute ride to visit the vast coffee farms in areas like Kiambu, Limuru, and others nearby areas. These farms were located less than 10 kilometers from the city center, many of them close to the edge of the Aberdare mountain ranges. In the mid-1990s, when I was in primary school, we were taught that Kenya was a leader in coffee and tea production, and I used to consume coffee almost daily. Then, all of a sudden, it seemed like one scandal after another emerged—farmers were not being paid, and the industry became overrun by brokers and middlemen. This meant local farmers were cut off from selling their coffee at competitive market rates and instead had to deal with corrupt government officials and brokers. So, what did the farmers do? Most abandoned coffee farming and converted their farms into prime real estate. Remember, these farms were near the mountain slopes, making the land highly valuable. These new houses became popular with the UN and foreign nationals from Europe and the US, who sought refuge from Nairobi’s “heat.” As a result, more coffee farms were converted into real estate, and today these areas feature some of the most expensive properties in Kenya. For instance, $200,000 would now be considered cheap for a three-bedroom apartment.

>>Diazna+(OP)
> Most abandoned coffee farming and converted their farms into prime real estate

This is happening in Vietnam as well (2nd largest coffee producer in the world).

Coffee margins are low because there are too many farmers and too few bulk purchasers, so most fermers have either switched to higher value nuts (eg. Macadamia) or sold the land off to tourism developers who can make a "Glam-Camping" experience for Korean, Japanese, or Thai tourists.

>>alephn+Kh
Does this also have something to do with Vietnam being mostly robusta?

>>yowayb+Wm
Nope.

Robusta is the primary choice across much of Asia. Vietnamese are heavy coffee consumers (so the domestic market is strong) and VNese coffee is cost-competitive in Japan and SK due to FTAs.

Furthermore, for historical reasons Robusta cultivars tend to be very popular across Asia (just like the Phin or Filter Coffee - the metal apparatus for drip coffee is part of the Colonial Era exchange across Asia - or chicory coffee mix)

It's just about money. Too many farmers entered the coffee industry in the 1990s and 2000s as it was the cash crop of choice back then, and there are a handful of larger wholesalers who cornered purchasing.

Nuts make way more money than coffee because of better margins and lower cost of inputs. A lot of this is also driven by Food Processors, as VN cornered the nut processing market (eg. most nuts from sub-Saharan countries like Côte d'Ivoire get exported to VN for processing) so there was excess capacity.

>>Diazna+(OP)

    > Most abandoned coffee farming and converted their farms into prime real estate.

So they made more money by selling their farm land, instead of being a farmer? That sounds like a good trade to me. This is pretty normal process in all highly developed countries.

Related: What do you think Silicon Valley and Los Angeles Valley looked like 100 years ago? Lots of fruit farms. Today? Housing and office buildings -- all considered prime real estate. Once farming became less valuable than the land, most farmers sold.

    > Nairobi’s “heat.”

Can you explain why you put "heat" in quotes? Is this intended to be sarcastic?

>>throwa+Er
> So they made more money by selling their farm land, instead of being a farmer? That sounds like a good trade to me

It's a great trade for an individual who wants to get rich. It's a potential disaster for a country whose 3rd biggest export is the thing nobody wants to do now.

>>alephn+wn

    > most nuts from sub-Saharan countries like Côte d'Ivoire get exported to VN for processing

Wow, that is crazy to think about. Exporting from one developing country to another -- on the other side of the planet, no less! Why can't Côte d'Ivoire do the processing themselves? That sounds like a great business opportunity. GDP per capita is about 30% lower in Côte d'Ivoire, so labour costs might also be cheaper.

>>throwa+Er
>That sounds like a good trade to me.

Perhaps it's only good because their income from coffee was low due to inability to bypass parasitic intermediaries.

>>throwa+Mt
Maybe it's similar to the "Grown in Argentina, packed in Thailand, sold in USA" pears issue https://www.youtube.com/watch?v=0aH3ZTTkGAs

>>throwa+Mt
>Why can't Côte d'Ivoire do the processing themselves?

Their civil war ended in 2010, Vietnam's in 1970-s

>>throwa+Er
Probably sarcastic as the temperature of Nairobi is quite moderate. A quick web serach states that the average summer temperature is

Average High: ~28°C (82°F) Average Low: ~14°C (57°F)

>>yowayb+Wm
this was likely due to the French whose coffee was traditionally robusta from their African territories, they almost certainly introduced coffee to Vietnam when they held it.

>>Diazna+(OP)
We’re fortunate to have your local Knowles and expert - thanks for sharing

>>throwa+Er
> So they made more money by selling their farm land, instead of being a farmer? That sounds like a good trade to me. This is pretty normal process in all highly developed countries.

The reasons and conditions are totally different in economies like those in Africa that are setup for wealth extraction vs. America where they are setup for wealth generation. The book ‘why nations fail’ does a great job of explaining this.

>>throwa+Mt
> Why can't Côte d'Ivoire do the processing themselves?

Capital.

Historically, Asian LDCs like Vietnam and Cambodia have had access to Japanese and Korean development loans and grants which allowed for businesses to build and innovate.

Most Sub-Saharan economies did not have those kinds of capital markets.

Depending on where you are in Africa, the Gulf, Turkey, India, and China have stepped in to fill the capital gap, but they tend to be much more extractive in their terms.

>>throwa+Er
The temperature in Nairobi ranges from 15°C to 28°C, and it very rarely exceeds 30°C. Theres other parts of Kenya where the temp is 35c+. In the areas where the coffee farms once thrived—now converted into prime real estate—the temperature ranges from 10°C to 25°C. These areas were originally tropical forests before being cleared for coffee farming and later developed into housing estates. There is still significant tree cover, which helps regulate the temperature, making these areas particularly attractive to foreign nationals.

>>Diazna+(OP)
There's a place where something similar happened (for different reasons). Some of the best farming from rich soil and a pleasant climate. Farming and fruit orchards filled the valley with prosperous plant growth. But then computer people took over and silicon valley is now just high-priced real estate and no growing.