Coffee, tea earnings drop as excess volumes fill markets

A worker at a tea plantation in Limuru on January 6, 2019./ENOS TECHE
A worker at a tea plantation in Limuru on January 6, 2019./ENOS TECHE

The value of tea exported for the January- November period grew by Sh8.9 billion, fresh data by Kenya National Bureau of Statistics, reveals.

It shows the value of greenleaf exports grew to Sh129.05 billion compared to Sh120.13 billion over the same period last year.

During the review period, tea produced for export purposes grew 9.58 per cent to 463,124.74 tonnes compared to 422,619.3 tonnes produced in 2017.

The data also shows 441,168.93 tonnes were produced during the period priced at an average Sh263.65 per kilo. Although the amount of tea produced was much lower in 2017, greenleaf produce fetched a much better price- an average Sh306.96 at the Mombasa Tea Auction.

According to KTDA, the drop in tea prices has been a result of higher tea volumes than the global market can absorb. Lower tea prices were also a result of economic sanction imposed on Iran by the USA.

“Farmers should expect lower earnings for the year should this price drop continue. There is still a lot of stock within the global tea supply chain, which is lowering prices. It is an issue of supply and demand and its effect on price,” KTDA Group CEO, Lerionka Tiampati said.

He added that the continued weakening of tea prices would significantly affect farmers’ earnings at the end of the financial year.

In October 2018, KTDA announced record income of Sh85.74 billion from the sale of tea supplied by smallholder tea farmers.

A total of Sh62.35 billion or 74 per cent of income was paid out to farmers as monthly and second payments.

According to KNBS data, the average value of coffee per kilo in the review period declined 13.66 per cent to Sh347.44 from Sh402.43 in 2017.

Over the period, coffee exports hit 42,368 tonnes, an increase of 860.57 tonnes compared to 41,507.43 tonnes recorded in 2017.

The value of coffee exports however dropped marginally fetching Sh22.17 billion last year from Sh22.68 billion for the same period in 2017.