Kenya Tea Development Agency (KTDA) managed factory tea prices rose by 1.74% to close at USD 2.64 (Ksh267.02) per kilogram (kg) of made tea during the last auction of 2019 compared to USD 2.59 (Ksh262.02) per kg for the same period last year.
This is against the backdrop of a fall in global tea prices occasioned by the global oversupply of the commodity and continuous political instability in the key tea markets.
The global tea market currently has a surplus of 200 million kgs of made tea.
This has seen the Mombasa auction prices average at USD 2.12 (Ksh214.47) per kilo during the last auction for the year 2019, whereas KTDA-managed factories prices fared better, averaging USD 2.64 (Ksh267.09) per kg.
Due to the on-going rains, greenleaf production between July and November rose to 488,020,108 kgs compared to 481,572,794 kgs delivered in the same period last year. Sold teas at the auction dropped by 4.6% from 102 million kgs to 97 million kgs in this period.
Pakistan, Egypt, United Kingdom, United Arab Emirates and Sudan remain Kenya’s key export destinations for the black CTC tea type processed in Kenya.
These countries have had significant currency devaluation due to political/economic crises. Tea being a commodity traded in US Dollars, the currency devaluation reduces the purchasing power of the consuming population.
Resumption of economic sanctions by the US on Iran also cut off one of the markets for Kenyan teas.
Though other agricultural commodities like coffee and milk are experiencing low prices, KTDA Chief Executive Officer Lerionka Tiampati said the agency-managed factories are diversifying to orthodox teas to reduce overreliance on black CTC tea.
Currently, seven factories namely, Kangaita, Michimikuru, Imenti, Thumaita, Itumbe, Gitugi and Kiru are producing the teas while three more, Kimunye, Chinga and Kagwe are expected to be commissioned in the first quarter of 2020.
Factory companies also continue to work on improving operational efficiencies to curb costs through a number of initiatives. These include investment in small hydropower stations for more stable power supply, continuous farmers training through the farmer field schools and financial literacy.
