Tea earnings hit Ksh.141 billion on high productivity

Earnings from Kenya’s tea sector hit a record high in 2018, grossing in revenues totaling to Ksh.140.9 billion in 12 months to December 31, 2018 from Ksh.129.3 billion in 2017.

The notable performance by the key Forex earner is on the back of improved weather conditions in tea growing areas during the first half of 2018, which led to the production of an all-time high quantity of 493 million kilograms of tea.

Auction prices did, however, dip owing to the increased supply which saw the sale of a kilo of tea average out at Ksh. 259 (USD 2.58) from Ksh. 299 (USD 2.98) in 2017.

The lower prices, which were also witnessed in other tea producing states in the region, were exacerbated by global market dynamics to include volatility and trade uncertainties.

“Uncertainty over sanctions on Iran prompted traditional tea producers supplying their produce to the market to shift to markets that favour the production of crush, tear and and curl (CTC) processes,” noted a leaked report from the Tea Directorate seen by Citizen Digital.

The Kenyan market was in on luck to hold up record sales in the international market against a strengthening shilling as other regional currencies came under pressure from a revitalized US dollar.

The Kenyan shilling for instance held its ground against the green buck to trade at an average of Ksh.102.42 from Ksh.103.28 in 2017.

Local consumption of tea during the year came in at 38 million kilograms, a marginal increase from the 36.6 million kilograms consumed in 2017.

Pakistan remained as the top destination for Kenyan tea taking up a total of 13.9 million kilos of the produce to top the export category ahead of Egypt and the United Kingdom at 5.2 and 4 million kilograms respectively.

Production in 2019 is expected to drop 416 million bags owing to reduced downpour during the short rains between October and December 2018.

The Tea Directorate, however, expects exports to top earnings at Ksh. 133 billion with the average price per kilo rising to Ksh.285 in the 12 months to December 31, 2019.