Tea sector raked in Sh97b last year

January 24, 2011
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, NAIROBI, Kenya, Jan 24 – The tea industry has reclaimed its spot as Kenya’s top foreign exchange earner having raked in Sh97 billion last year.

The exports earnings rose 40.5 percent from Sh69 billion registered in 2009 and surpassed those from horticulture which fetched Sh78 billion in the same period.

The Tea Board of Kenya attributed the impressive performance to a combination of factors including improved purchasing power and increased demand for the beverage in emerging markets such as China, Iran and Turkey.

“If you look at the performance of the industry in 2010, you could perhaps only compare it to 2007 where the industry performed well having produced 369 million kilos. But even then, last year happens to be the highest in record terms and we assume for a bit of time it will continue being a record year,” said the board’s Managing Director Sicily Kariuki.

A weak shilling as well as improved export volumes also contributed to the overall earnings. A total of 441 million kilograms (kgs) were exported during the period to 48 destinations compared to the 342 million kgs sold in 2009.

“Egypt continued to be the largest market for Kenyan tea having imported 93 million kgs or 21 percent of total export volume. Pakistan, the United Kingdom, Afghanistan and Sudan were the other top markets,” Mrs Kariuki added.

Although the top five destinations accounted for 73 percent of total volume exported, a ‘sizeable’ growth was recorded in emerging markets where the Board has been aggressively promoting local tea.

Good weather conditions also contributed to the improved production which was also at an all time high at 399 million kgs.

From a sub-sector perspective, the smallholder industry posted the highest production increase of 30.4 percent to 52.4million kgs with the plantation side managing a 22.9 percent rise to 174million kgs.

“The total production in 2009 was 314million and therefore you are looking at a jump of 27 percent,” the MD added.

The high good performance was also reflected at the Mombasa tea auction where the average price for Kenyan tea was $2.75 (Sh220) up from $2.72 (Sh217.6) realised in 2009.

Local consumption grew by three percent to 18.7 million kilos which Mrs Kariuki said calls for sustained and aggressive marketing campaigns to encourage Kenyans to drink more tea.

The industry seemed to have shrugged off a workers’ strike in October last year that had been called by the Kenya Plantation and Agricultural Workers Union to protest against the introduction of the tea plucking machines.

While Mrs Kariuki acknowledged that mechanisation would reduce the cost of production for the investors, she said this technology needed to be applied in moderation to avoid resulting in massive job losses.

“But then again, whenever a party feels aggrieved when they are issues of mechanisation or adoption of technology, we think that there should be more dialogue that taking of hard-line positions because the strike was exaggerated largely because they was a lot of taking sides,” she reckoned.

Going forward and factoring in the ongoing dry spell in some parts of the country, production is expected to drop with that of the first quarter of 2011 estimated to be at 85 percent, which is a 23 percent dip from that posted in the corresponding period last year.

“We think that total production (in 2011) will come down slightly to stand in the range of 350 million kgs to 360 million kgs. We also think that India and Sri Lanka (which are major tea producers) will be impacted negatively by severe weather and so within the year, world production will have come down marginally to be in the range of 3.9billion kgs,” the MD projected.

However, better prices are expected to hold as is the case when production declines and so earnings have been pegged at Sh97 billion.

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