Tea prices fall to 10 month low as industry hurts from strikes

Jane Wambui plucks her tea at Wamagana Village in Tetu, Nyeri County recently. With falling prices farmers are staring at low earnings. [PHOTO:KIBATA KIHU/STANDARD]

Tea prices have dropped to a 10-month low, compounding troubles in the sector currently hurting from industrial action.

Data from the Kenya National Bureau of Statistics (KNBS) published this week shows that tea auction prices dipped to an average Sh213 per kilo in April.

This is a 37 per cent drop from the Sh343 a kilo was fetching in August last year. The sharp drop in prices could hurt the fortunes of the crop that was biggest forex earner for the country last year. Tea exports earned the country Sh123 billion in 2015, racing ahead of horticulture which brought in Sh100 billion.

“The quantity of processed tea dropped from 45,330 metric tonne in March 2016 to 37,571 metric tonne in April 2016. The price of the processed tea decreased from Sh233.60 to Sh213.89 per kilo over the same period,” KNBS said in its monthly Leading Economic Indicators covering upto the first quarter of the year.

This comes at a time when Tea firms are battling clamour for wage increments. For instance, Tea firms in Nandi have threatened their striking workers that they will be forced to acquire tea plucking machines.

The strike by tea workers has seen thousands of kilogrammes of green tea leaves go unpicked. Employment and Labour Relations Court recently issued a directive to the tea companies to increase the employees’ basic pay by 30 per cent over a period of two years.

Nandi-based EMROK tea factory Chief Executive Robert Keter said if the unions continue to push for the pay increase, they will be forced to adapt to the use of plucking machines. “The percentage awarded is too high for companies to meet which is why there is need for the union officials to go back to the drawing board and make it (pay increase) realistic,” said Keter.

Tea is the second major cash crop to come under pressure from a slide in fortunes after Coffee which is also battling ghosts of its own.

Value increased

The KNBS report shows that the quantity of coffee auctioned at the Nairobi Coffee Exchange increased from 4,513.4 metric tonne in April 2016 to 4,730.8 metric tonne in May 2016 while the average auction price decreased from Sh339.66 per kilogram to Sh262.90 per kilogram over the same period. This is a 22 per cent drop in just one month.

But the drop in prices of coffee and tea could be compensated from an increase in exports. The report notes that the quantity of coffee exported increased from 4,168.6 metric tonne in March 2016 to 4,803.9 metric tonne in April 2016 while its value rose from Sh2.2 billion to Sh2.5 billion over the same period.

The quantity of tea exported expanded from 37,571.2 metric tonne in March 2016 to 39,312.6 metric tonne in April 2016, while its value declined from Sh9.8 billion to Sh9.5 billion million over the same period.

On its part, the amount of cane deliveries increased from 646,000 tonnes in January 2016 to 608,000 tonnes in February 2016. The decline is likely to hurt sugar millers who are already facing shortages that have led to unending feuds over cane poaching.

The KNBS report also notes that the average price for dry maize fell slightly from Sh31.08 per kilogram in March 2016 to Sh31.02 per kilogram in April 2016. The average price per Kilogram for dry beans in the month of April 2016 was Sh72.02.

Milk deliveries to formal processors went up from 48.9 million litres in March 2016 to 52.8 million litres in April 2016.