Kenya’s tea agency projects lower prices as production increases

KENYA – Kenya Tea Development Agency (KTDA) projects low earnings for tea farmers this year following a 17% drop in the price of the beverage in the first half of the 2018/2019 financial year, reports Business Daily.

In the first half of the 2018/2018 financial year, Kenya recorded increased volumes of processed tea which pushed down the average price of KTDA tea by 17% to US$2.7 (Sh271) per kilogramme from US$ 3.25 (Sh327) for the corresponding half of 2017/18.

Lerionka Tiampati, Chief Executive Officer KTDA group said that the price will further weaken which could significantly affect farmers’ earnings.

“Farmers should expect lower earnings for the year should this price drop continue.

There is still a lot of stock within the global tea supply chain, which is lowering prices, it is an issue of supply and demand and its effect on price,” he said.

During the six months period to end of 31st December 2018, green leaf increased marginally by 4.4% to 611 million kilos on account of good weather that spurred the rise in volume.

Data from the tea agency reveals that the company realised 585 million kilos of green leaf delivered to factories in the previous half of 2017/2018 year.

“Increased production in the six months to December was largely attributed to the reliable rainfall experienced in tea growing areas.

We also intensified sustainable agricultural practices such as fertiliser application that improved the quality and quantity of green leaf,” he added.

KTDA also said that tea producing countries such as India and Malawi also reported higher yields in 2018, adding to global stocks which pushed prices down.

Kenyan farmers earned a record US$850 million riding on a bumper harvest in the last season, defying the fall in global prices and marking the third year of improved earnings.

However, during the season, Kenya’s tea earnings increased by 9.4% compared to the previous season’s income of US$770 million

A kilo of green leaf fetched about Sh52.51 in the last season, having dropped from Sh58.61 in 2017.

KTDA linked the drop in price to “escalating costs of production and depressed prices” during the last quarter of the financial year.

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