January production of Africa's best coffee beans was slashed by 27 percent last month as a result of a drought that has Kenya's economy suffering the most since 2008, Bloomberg reports.
Kenya's overall agriculture industry has suffered as a result of La Niña, according to domestic meteorologists who say rainfall might slip for the remainder of 2011. The last three months of 2010 also ended up being drier than usual. Consequently, reduced harvesting will continue damaging the national economy.
Reduced crop yield "would have a chain effect on the economy," Peter Mutuku, senior corporate currency trader at Bank of Africa, told Bloomberg. "It would have a direct effect on a huge employment sector. Foreign-exchange reserves would also be affected, bringing pressure to bear on the shilling."
Two top buyers of Kenyan beans – Nestle and Starbucks – suffered since they rely on the East African nation's beans, often considered Africa's best.
Twenty-five percent of Kenya's gross domestic product and half of its exports depend on agriculture. The nation's economy is believed to be East Africa's most vibrant and largest. The country last had low growth three years ago when violence followed a disputed election.
"The worst-case scenario is it could knock 2 percent off of GDP in 2011," Wolfgang Fengler, the World Bank’s chief economist in Kenya, told Bloomberg, noting what would happen if no rain fell in March.
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