Connect with us

Hi, what are you looking for?

Capital Business
Capital Business
COURTESY

Kenya

Global glut pushes down tea prices

NAIROBI, Kenya, Jan 18-The volume of green leaf produced by smallholder tea farmers under Kenya Tea Development Agency (KTDA) management dropped marginally by 0.7 percent to 615 million kgs during the last six months ending December 2020 compared to 619.5 million kgs recorded during the same period in 2019.

During the period under review, the average price per kilo of KTDA teas at the Mombasa Tea Auction dropped significantly by 14 percent to USD 2.18 from USD 2.54 recorded in the same period in 2019.

Despite the slight drop in production, the drop-in tea prices is attributed to the high volumes of tea that continue to be delivered to the auction from the region, in addition to the global oversupply of tea.

“High volumes of tea produced in the East African region and elsewhere on the globe have contributed to the continued price decline in the global market,” KTDA Management Services Managing Director, Alfred Njagi, said.

This is the third year in a row that prices have declined due to global supply surplus above the market demand and in line with a 2018 Food and Agriculture Organization (FAO) market forecast*.

The high tea production in Kenya is majorly a result of favorable weather conditions during the period, besides the rapid expansion of acreage under tea over the years.

In the last financial year (2019/2020), smallholder farmers under KTDA produced 1.454 billion kilograms of green leaf, up from 1.13 billion kilograms the previous year (2018/2019).

This represents a 28.7percent increase in production.

Data from the Kenya National Bureau of Statistics (2020) also shows that smallholder farmers across the country, including those delivering to KTDA managed factories, have been increasing acreage under tea, which stood at 163,000 hectares (2019), up from 141,800 hectares (2018) which has contributed to the increase in tea volumes on offer in the market.

Advertisement. Scroll to continue reading.

‘‘The impact on tea prices of the commencement of the Tea Act 2020 that requires all black tea exports processed and manufactured in Kenya to be sold exclusively at the tea auction floor will soon be realized” Mr. Njagi, said.

He added, “We are waiting to see the full effects of the new law to the industry in the coming months.”

In 2019, the world produced 6.1 million kgs of made tea during which time consumption stood at 5.86 million kgs, spilling an excess of 290 million kgs of tea that continues to crush the markets.

The increased global tea production is responsible for the downward movement of prices.

“To improve tea prices for the smallholder tea farmers, the Kenyan Government through the newly created Tea Board, needs to assist grow the African market for Kenyan teas by courting some of the West and North African countries such as Morocco, Nigeria and also markets in other continents that are importing tea from outside Africa,” Njagi added.

 

 

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...