KENYA – The Africa Trade Brokers Limited has revealed the average price of Kenyan tea sold at the Mombasa auction dropped by 2.6 percent in the first eight months of 2024.
This decline comes as local tea production surged by 17 percent, contributing to a challenging year for tea farmers who are also grappling with the depreciation of the Kenyan shilling.
According to the report, the average price of tea at the Mombasa auction has fallen to US$2.2 (KES 283.5) per kilogram, down from US$2.26 (KES 290.97) during the same period last year.
The lower prices signal reduced earnings for tea farmers this year, adding to the financial strain caused by the weakening Kenyan shilling.
The shilling has depreciated significantly, with the exchange rate dropping from about KES128.75 per US dollar in January to around KES 163 currently.
This contrasts sharply with last year when tea farmers enjoyed record earnings.
Over 600,000 farmers affiliated with the Kenya Tea Development Agency (KTDA) received a record bonus payment of KES 44.15 billion (US$342.59M), bringing total earnings to KES 67.7 billion (US$521.22M) for the financial year ending June 2023.
The high earnings were driven by a combination of higher tea volumes and a weak shilling.
The current year has seen a sharp increase in tea production, with the Tea Board of Kenya (TBK) reporting a 17 percent rise in output to 321.09 million kilogrammes in the first six months of 2024, up from 273.64 million kilogrammes during the same period last year.
The surge in production is attributed to favorable weather conditions, including higher precipitation during the El Niño season and enhanced rainfall during the long rains (March-April-May) season.
The increase in output has also been supported by the government’s fertiliser subsidy program, which lowered the cost of this key input for farmers.
The government distributed 97,974 tonnes of fertiliser to farmers at a subsidized cost of KES 2,500 (US$19.40) per 50 kg bag, boosting production.
Of this, 92,700 tonnes were procured and distributed through the KTDA, while an additional 5,274 tonnes were disbursed via the Kenya National Trading Corporation.
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