KENYA – Tea prices are expected to record a further decline in the coming year due to robust supply from major producers and a weak demand by key importers, a report from the World Bank has revealed.
The average auction price for Kenyan tea stood at $2.25 per kilo, which was lower compared to $2.56 per kilo in the first six months of 2022.
The auction prices have been on a declining trend since the second quarter of 2022 owing to lesser demand due to recession in the global market.
According to the World Bank report, “lower tea prices reflect robust supply from major producers and exporters, including India and Kenya (East Africa’s largest tea supplier) as well as weak demand by key importers, including Iran.”
“Following a projected eight percent decline in 2023, tea prices are expected to decline a further two percent in 2024 before stabilizing in 2025 as supply in South Asia, especially Sri Lanka recovers,” the report added.
From the recent tea bonus payouts, farmers enjoyed higher pay compared to last year’s payout, owing to increased production volumes and the weakening of the Kenyan Shilling, with the local exports fetching more where imports are expensive.
The report comes a period after nearly half of the tea offered for sale at the auction by the Kenya Tea Development Agency (KTDA) was withdrawn from the trading floor in an earlier auction as traders prioritized buying higher quality grades of the commodity.
According to Mr. Kimanga, a tea trader, “buyers cannot just pay higher prices to acquire any quality of tea. Because of the minimum price, they are selective about the teas that they pay for.”
The decline in local tea prices comes amid efforts by the Kenyan government to drive export prices up. The government, through KTDA, has rolled out a plan to promote tea value addition and specialty tea production that is fetching better prices in the global market.
Meanwhile, coffee farmers, Kenya’s second highest produced beverage, look at a brighter future as the government strikes new coffee deal with Java. The deal will see Kenyan coffee farmers supply 700 tonnes of coffee to Belgium based company.
