Farmers hurt as tea prices drop by 30pc

Luke Metto at his Tea Farm taken on 31st September 2015. PHOTO:WILBERFORCE OKWIRI

Tea prices in the Mombasa auction dropped by 30 per cent in the last couple of months adversely affecting farmer’s profit margin. The fluctuation in prices has been attributed to a sharp increase in production that led to an oversupply at the auction market.

According to the Ministry of Agriculture, between January and February, production rose by 80 per cent against a limited demand for the product globally. This was revealed during the 22nd session of the FAO-IGG conference on tea held at Enashipai Spa in Naivasha and attended by delegates from various parts of the world.

Speaking during the opening of the forum, Agriculture CS Willy Bett termed price fluctuation as one of the biggest challenges facing the sector. Bett noted that currently tea production outstrips consumption, adding that there was urgent need to seek new markets as currently production outstrips demand. “Currently, only five per cent of the tea produced locally is consumed by Kenyans while the rest is exported to various countries,” he said.

Subsidized fertiliser

In a bid to improve consumption, the CS said the Government had diversified tea processing licences so as to attract more investors into the sector. Bett noted that Kenya was currently the third leading producer of tea after China and India.

“Tea earned the country $1.25 billion (Sh125 billion) in the last financial year and this is an increase of 23 percent compared to 2014 when the product recorded $1.01 billion (Sh101 billion),” he said. He said the government was committed to supporting the sector through various measures like offering subsidized fertiliser and reducing the cost of energy.

“The 13 African tea producing countries export their tea through the Mombasa auction underscoring Kenya’s significance as a hub of tea trade in the continent,” he said.

The CS added that in 2015 globally tea production hit 5.1 billion kilos, with Africa producing 592 million kilos which accounted for 13 per cent of the production.

FAO representative at the meeting Kaison Wang noted that in 2014 tea production globally fell by 2.4 per cent. “This drop resulted in an estimated 4.4 per cent decline in export volumes to $5.61 billion (Sh564 billion) at the global level,” said Wang.

He, however, noted the revenue generated from the product contributed significantly to financing food import bills for tea exporting countries. “Although foreign exchange earnings from tea were relatively less for the other producing countries, they remained significant,” he said.

Kenya Tea Growers Association CEO Apollo Kiarii noted wages paid by the tea sector are substantially higher than those paid in other tea producing nations in the region. He said high labour cost has rendered many low yielding fields unprofitable and farmers have had to be innovative by introducing mechanised harvesting as well as factory processing.