Tea earnings dip 16.4pc over low auction prices

Monday, January 27th, 2020 00:00 |
Tea farmers pick tea. Photo/File

Tea earnings declined by 16.4 per cent to Sh117 billion, the lowest-ever in the last five production years, thanks to low auction prices experienced in 2019 crop year, a government agency has said.

Anthony Muriithi, Interim Director General of Agriculture and Food Authority (AFA) – the regulatory authority for the food and agriculture sector – said farmers earned less during the period under review despite increased export volumes.

He said during the year 2019, a total of 496.75 million kilos were exported to various market destinations compared to 474.06 million kilos in 2018. 

“However, the export earnings decreased by Sh23 billion from Sh140 billion recorded in 2018 to Sh117 billion last year. Lower earnings were attributed to low auction prices,” Muriithi added.

Market diversification

He said during the period under review the tea industry witnessed an increase in market diversification, an initiative championed by the stakeholders in both public and private sector.

Tea production, Muriithi predicted, may marginally increase in 2020, owing to slight rainfall increase experienced since late last year and early this year.

During the review period, tea production dropped to 458.85 million kilos from 492.99 million kilos recorded in 2018, representing a 6.95 per cent decrease.  

Though remarkably higher compared to other record outputs of 439 million kilos in 2017 and lower than 473 million kilos in 2016.

President Uhuru Kenyatta early this month announced far-reaching reforms in tea sub-sector bordering on pricing policy and mechanism to improve the livelihoods of smallholder farmers.

“The key concerns are on low tea prices, delayed payments, low initial payment by Kenya Tea Development Agency and fluctuations in net income of tea farmers.

I further direct the ministry of agriculture to immediately explore the option of Kenya Tea Development Agency (KTDA) paying farmers no less than 50 per cent of their deliveries as monthly payments with balance being paid as annual bonus,” said recently.

Last year, KTDA paid farmers an average of Sh41.27 per kg of green leaf in the 2018-19 bonus payment compared to 2017-18 average payment of Sh52.83. In 2016/2017, farmers earned an average Sh58.76 per kilo, the highest in the last three years.

During the review period, increased supply occasioned by carry over of stocks from previous year, tea prices at the Mombasa Tea Auction registered a decline from an average of $ 2.58 (Sh258) per kg recorded in 2018 to $2.21 (Sh221). 

Tea from other producers in the region also experienced significant reduction in auction prices.

“Lower prices were also attributed to higher supply in tea production within the region and in other global CTC producing countries owing to favourable weather conditions coupled with other global market dynamics,” Muriithi said.

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