Kenyan tea exports to Afghanistan on despite political wave

Overall volumes have however dropped over the past five years.

In Summary

•Auction prices have also remained low at the Mombasa auction meaning farmers will earn less this year.

•Factory directors from the 54 KTDA-managed factories to start meeting next Monday to review audited accounts, which will pave way for declaration of bonuses.

Packaged tea for export at warehouses in Shimanzi, Mombasa/FILE
Packaged tea for export at warehouses in Shimanzi, Mombasa/FILE

Political instability in Afghanistan has not affected Kenyan tea exports to the South Asian country, auction managers have confirmed, as prices rebound to $2 a kilo this week.

However, export volumes to the country have dropped over the past seven years with Kenya facing competition from global exporters.

The value of exports to Afghan dropped from a high of Sh15.7 billion in 2013 to a Sh3.5 billion in 2018, and about Sh2 billion last year.

Annual volumes have equally dropped from about 61.9 million tonnes to 10.2 million tonnes during the period under review, data by auction managers—East African Tea Trade Association (EATTA) shows.

Exports however continue to flow with volumes being moved through neighbouring Pakistan's borders, into Afghanistan, despite activities by Afghanistan packers remaining low this week.

“Tea exports have not been affected,” EATTA managing director Edward Mudibo said.

Kenya is facing stiff competition in the export mark mainly from the China, India, Sri Lanka, Turkey, Indonesia, Vietnam, Japan, Iran and Argentina. 

Pakistan is the leading export market and accounts for 40 per cent of Kenyan tea exports.

The capturing of the Afghan capital, Kabul, by the Taliban is however projected to affect trade with Kenya, which mainly exports tea, coffee, textile and edible vegetables.

Kenya also re-exports mate, spices, pharmaceuticals, rubber,  and machinery.

Meanwhile, auction prices have rebounded to the two-dollar mark with a kilo averaging $2.04 (Sh224.64 ) at this week's auction, as total volumes traded increased by 158,257 kilos compared to last week.

This is after sliding to $1.98 (Sh218.04) in last week's trading.

According to EATTA, there was good but irregular demand prevailing for the 121,938 packages (7,968,316.00 kilos) available in the market with prices following quality with 89,879 packages (5,878,182 Kilos) being sold. 26.29 per cent  packages remained unsold. 

“Egyptian Packers, Yemen, other Middle Eastern countries, Sudan and UK showed useful activity with reduced interest from Pakistan Packers, Kazakhstan, other CIS nations, Bazaar and Russia. Afghanistan and Iran were quiet while Local Packers lent some support on account of price,” Mudibo notes.

Somalia were active at the lower end of the market.

Tea prices have however remained low this week compared to last year, trading at average $1.70 (Sh187.20) for the better part of the year.

This means farmers' earnings will be low this year and would only be cushioned by the strong dollar against the Kenyan shilling.

Factory directors from the 54 KTDA-managed factories will from next Monday hold meetings to review and approve the factories’ annual audited accounts for the 2020-21 financial year, which will pave way for declaration of bonuses.

KTDA acting Group CEO, Wilson Muthaura, yesterday urged farmers to be patient as they wait for factory directors to complete the process.

The performance of the factory companies comes on the backdrop of a nine per cent drop in CTC tea prices at the Mombasa Tea Auction from an average of $ 2.38 financial year (2019-2020) to US$ 2.18 in the 2020-2021 financial year ending June 30, 2021, KTDA notes.

During the financial year under review, farmers delivered 1.28 billion kilos of green leaf to factories, a 14 per cent drop from the record production of 1.45 billion kilogrammes in the previous year (July 2019 to June 2020).

“The drop in prices in the period under review was a continuation of a downward trend witnessed since 2018 as high production over the years has seen supply outstrip demand and tea processers carrying forward unsold tea stocks,” Muthaura said.