Covid-19 pandemic, disruption in key export destinations contributes to drop in tea prices.
Smallholder tea farmers under Kenya Tea Development Agency (KTDA) produced a record of 373.8 million kilos of the green leaf between July and October 2020.This is the highest production ever recorded within a period of four months in KTDA’s history. The four months production is 3.9 per cent higher than 359.6 million kilos of green leaf recorded in the same period in 2019.KTDA Managing Director Alfred 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) program.On average, all teas at the Mombasa auction sold at USD 1.89 during this period, down from USD 2.01 in the corresponding period in 2019.The 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. 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 Organisation (FAO) market forecast.Despite this, factories managed by KTDA teas fetched better prices at the auction in the period under review (July – October 2020) averaging USD 2.20 per kilo of made tea, down from USD 2.45 recorded during a similar period in 2019.The 10 per cent drop in tea prices for KTDA-managed factories is attributed to high volumes of tea produced during the period, continued Covid-19 pandemic disruption in key export destinations as well as the global oversupply situation.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.Said KTDA-managed factories to continue working 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.
Source: The Star