Tea consumption drops as production rises

KENYA – Tea consumption in Kenya dropped in the first eight months compared to the corresponding period last year.

Data from the sector regulator, the Tea Directorate, indicates that consumption stood at 1.97 million kilogrammes compared to 2.8 million kilogrammes registered during the same time last year.

The reduced consumption is a setback to the directorate’s efforts to promote consumption by Kenyans, who have for many years only taken up just a fraction of what is produced by farmers.

Kenya exports 95 per cent of the tea produced locally and is the largest exporter of the beverage to the world market. This is unlike China, which is the leading producer of the commodity but consumes all its tea.

Players in the industry have been banking on improved local consumption to protect the commodity in times of price volatility.

At the same time, statistics indicate that tea production has gone up to 28.41 million kilogrammes in the last eight months compared to last year when it stood at 26.8 million kilogrammes.

The growth in production is due to favourable weather that saw an increase in green leaf from farmers delivered to factories.

In January, production hit 41 million kilogrammes, the highest so far this year, followed by May when 37 million kilogrammes was recorded .

At the moment, production of the beverage is declining with the Mombasa auction registering a drop in volumes offered for sale.

The quantity dropped from 7.8 million kilogrammes in the previous sale to 6.8 million kilogrammes in last week’s auction.

 “We are have been witnessing reduced volumes at the auction in the last couple of auctions,” said Edward Mudibo, the managing director of the East African Tea Traders Association.

The decline has helped push up the price of tea to a two-month high with a kilo fetching Sh308 in last week’s auction from the previous trade’s Sh299.

The good prices witnessed this year saw growers affiliated to the Kenya Tea Development Agency (KTDA) receive Sh28.7 billion in the second round of payment for their produce compared to the Sh19 billion they earned in a similar period the previous year.

Overall, the total earnings for the KTDA farmers rose to Sh63.6 billion for the 2014/2015 financial year compared to Sh52.6 billion in the last financial year.

The good earnings were boosted by a stronger dollar against the weakening shilling, which favoured the exports.

October 27, 2015; http://www.businessdailyafrica.com/Domestic-tea-consumption-drops/-/539552/2929872/-/100bpdi/-/index.html

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