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Kenya Tea Production hits Record High Despite Decline in Global Prices

Green leaf production by factories affiliated to Kenya Tea Development Agency (KTDA) Holdings’ grew by 28.5 per cent for the year ended June 30, 2020 to stand at 1.448 billion kilograms (kgs) compared to 1.127 billion kgs over a similar period last year.

The growth is attributed to continued favourable weather across tea-growing regions, improved crop husbandry practices among tea farmers and farmers who have resumed delivering crop to their factories due to better payments and services.

This growth came amid a tumultuous second half of the year that saw global tea prices plummet on the back of product oversupply in the market as well as disruptions occasioned by the COVID-19 pandemic.

These include reduced demand for tea across markets as well as the restrictions on movement of goods and services across the world at the start of the pandemic.

As a result, the unit price of KTDA sold teas, for the financial year 2019/2020, fell by 6.8 percent to an average twelve-year low of USD 2.42 per kilo compared to USD 2.59 per kilo in 2019. This is the lowest KTDA average price since 2008 when the average price per kilo of tea at the auction was USD 2.17.

In the last three auctions for the year ended June 2020, the average price for a kilo of tea at the auction dropped below USD 2; a scenario last seen in 2007.

The trend in falling prices is replicated across other markets such India and Sri Lanka that have also posted similar price declines as a result of oversupply and the disruption in the industry.

The 54 tea factory companies, which own the 69 factories that are managed by KTDA, will proceed to close their financial books for the year and also declare the final payment to each of their tea factory farmers.