Tea farmers warned to brace for tough times as earnings drop

Tea export earnings dropped significantly during the first half of 2016, even as the Ministry of Agriculture warns of tougher times for farmers in 2017.

The Kenya Tea Industry Performance Report, 2016 warns that the depressed rainfall conditions experienced during the 2016 October/December short rains and the effects of the current drought in the country spells trouble for tea production in the first quarter of 2017.

The report forecasts a significant drop in production compared to the same period in 2016.

Consequently, the total production for 2017 is expected to drop to about 416 million kilogrammes, a 12 per cent decrease from yield realized in 2016 crop season.

The industry report was launched yesterday by Agriculture, Livestock and Fisheries Cabinet Secretary Willy Bett.

Painting an even gloomier picture for 2017, the report avers that export volumes are expected to drop by 12 per cent with the ministry targeting sales of 422 million kilos.

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In 2016, export earnings dropped to Sh120.6 billion, to reflect a drop of Sh4.5 billion compared to Sh125.2 billion recorded in 2015 crop season. This drop was despite the country recording an all-time high production of 473 million kilogrammes during the year under review.

Tea production for 2016 was 18.4 per cent higher than 2015, with 473 million kilogrammes produced recorded last year, compared to the 399 million kilogrammes that rolled out of the factories in 2015.

“Following good weather conditions experienced in tea growing areas during the first-half of 2016, tea production for the year recorded the highest production at 473 million kilogrammes. This was also remarkably higher compared to other record outputs of 445 million kilogrammes listed in 2014 and 432 million kilogrammes in 2013,” the report notes.

The huge production in 2016, however, did little to help the plight of farmers, with auction prices declining significantly from an average of $2.98 (Sh303) per kilogramme recorded in 2015 to $2.36 (Sh240) last year.

In a speech read on his behalf by Agriculture and Food Authority (AFA) chairman Raphael Lekolol, Mr Bett called on tea processing factories to improve efficiency in their operations to enable them pay farmers a premium price, close to 75 per cent of the tea auction price.

“It is a good thing that Kenya Tea Development Authority (KTDA) managed to pay farmers 75.5 per cent of the auction price in the financial period 2016/17 according to results released in October 2016. I encourage the tea estates to also follow suit,” explained Bett.

The CS also added that the Government is reviewing taxes charged on tea so as to rationalise the tax regime and reduce the cost of doing business in the industry.

In a positive turn of events, local tea consumers upped their consumption, taking up 29.7 million kilogrammes in 2016 compared to 19.3 million consumed in 2015.

Small-scale farmers performed well against large-scale estate owners accounting for 265.6 million kilogrammes of the total production, compared to 207.4 million kgs realised by large-scale farmers.

Both sub-sectors, however, recorded improved output with the highest increase of 28 per cent recorded registered by large estates. The increase in the small holder sub-sector was 11.7 per cent.

Kenya’s tea industry is the country’s leading foreign exchange earner accounting for 25 per cent of the country’s total foreign exchange earnings and contributing about seven per cent to the GDP.

The sub-sector in 2015 earned the country a total of Sh140 billion, with Sh125 billion earned from exports and Sh15 billion realized from local sales.