Kenyan farmers to miss global tea prices boom

July 30, 2008

, NAIROBI, July 30 – Kenya will miss the surge in global tea prices due to much expected lower-than-usual tea production this year, which might also be affected by soaring domestic consumption, the Tea Board of Kenya said on Wednesday.

Kenya\’s annual tea production is expected to fall by about nine percent as a result of frost and dry weather conditions registered in the first three months of the year, sparking a price rally in the third quarter of 2008.

Sicily Kariuki, the Tea Board of Kenya Managing Director, said tea production for the first half of the year registered a 21% drop, from 198 million kgs registered in the same period last year, to the current 157 million kgs.

The highest drop in production, 34%, was experienced in the first three months of the year, as a result of dry weather conditions experienced in most tea growing areas and frost that hit parts of the west Rift Valley.

Between January and June, a total of 125 million kgs of Kenyan tea was offered for sale at the Mombasa auction, against the 158 million kgs offered in the same period last year.

Due to the lower quantities of tea offered for sale, the average auction prices were higher at $2.34 a kilo compared to the $1.72 if fetched in January, Kariuki said.

High quality tea fetched a higher price of $3.66 in June this year.

Kenyans consumed more tea during the first half of 2008, leading to a minimal two percent increase in the volumes consumed locally. In the months of January to June, Kenyans consumed 8.6 million kgs of tea compared to 8.4 million kgs consumed during the same period in 2007.

It appears more Kenyans turned to drinking tea after the country\’s worst form of political violence subsided in March, leading to an impressive 12% increase in the local consumption. During the same period, domestic usage shot up to 5.3 million kgs from 4.7 million kgs in 2007.

Kariuki attributed it to a local campaign to push up consumption, launched towards the end of the second quarter of 2008.

"The objective of the campaign is to enhance usage of tea in the domestic market through promoting the culture of tea consumption at all times, as well as positioning tea as a contemporary and healthy drink," Kariuki told journalists at an early morning briefing on Wednesday.

The lower production is expected to persist in the months of July-August as a result of the less impressive weather conditions prevailing in the tea growing regions of the Rift Valley.

Kariuki observed that the cold season, which followed the end of the March-May rains hit production and the last four months of the year is expected to remain unchanged, meaning production will remain subdued.

She predicted that the production shortfalls were unlikely to be overcome, which would eventually lead to a lowering of the annual production to 336 million kgs from the 369 million kgs recorded in 2007.

"The tea auction and export volumes for the year (2008) will be less than last year, while the prices are expected to be higher," she stated.

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