Tea Prices Decline Amidst Growing Production Volumes
The Kenya Tea Development Agency (KTDA) says tea prices at the Mombasa Tea Auction declined 10% between July and October 2020 compared to the corresponding period last year.
According to the agency, a kilogram of tea was sold at an average price of 2.20 dollars compared to 2.45 dollars last year.
“This drop is linked to the higher supply of tea in the markets, a factor that is critical in determining farmers’ earnings at the end of the financial year,” said Alfred Njagi, KTDA Managing Director.
The drop in prices is also attributed to disruptions caused by the COVID-19 pandemic in key export destinations as well as the global oversupply.
On average, all teas at the Mombasa auction sold at 1.89 dollars during this period, down from 2.01 dollars in the corresponding period in 2019.
This is the third year in a row that prices have declined due to global supply surplus above market demand and in line with a 2018 Food and Agriculture Organization (FAO) market forecast.
KTDA has said smallholder farmers under its 54 factories produced a record 373.8 million kilos of green leaf between July and October this year, the highest production ever recorded within a period of four months in KTDA’s history.
The four months production is 3.9% higher than 359.6 million kilos of green leaf recorded in the same period in 2019.
Njagi attributed the increase in green leaf production to favourable weather conditions in the tea-growing areas and good farming practices by tea farmers as recommended in the Farmers Field Schools (FFS) programme.
Pakistan, Egypt, UK, UAE, and Sudan remain Kenya’s key export destinations for the predominant black CTC-type of tea produced in Kenya.
These countries have gone through political and economic challenges over past years affecting their purchasing power.
KTDA-managed factories continue to work on improving operational efficiencies to reduce production costs through a number of initiatives.
These initiatives include investment in small hydropower stations for cheaper power supply, automation of various processes, diversification to orthodox teas to reduce reliance on Black CTC teas, and training of farmers on income diversification and management.