Tea rakes in Sh120b on higher volumes
Kenya’s earnings from tea exports grew marginally last year on account of higher volumes despite the harsh impact of the coronavirus pandemic on the economy.
New data from the Tea Directorate shows earnings reached Sh120 billion in the 12 months to December 2020 compared to Sh119 billion in 2019. The sector remained a key foreign exchange earner for the country last year after the tourism sector suffered a major hit from the coronavirus pandemic, with many of the operators being forced to lay off workers or close down altogether.
Earnings are, however, yet to fully recover and match the record Sh140 billion the industry earned in 2018.
This was on the back of a decrease in tea prices in the global market as well as a decline in local production due to poor weather.
According to the Tea Directorate, earnings for the period under review were lifted by higher volumes of tea exported to different markets that consume Kenya tea.
This was despite a drop in the average tea prices, which stood at $2.01 (Sh219) per kilo in 2020 compared to $2.20 (Sh240) in 2019 and $2.60 (Sh283) in 2018.
The price of tea at the auction, however, affected the amount of tea offered for sale, with higher quantities putting pressure on the prices.
“Total earnings from tea was Sh120 billion against Sh119 billion and Sh140 billion in 2018. Higher earnings were attributed to increased export volume,” said the directorate.
“Lower prices during the year were attributable to the enhanced supply of tea coupled with the impact of Covid-19 pandemic on distribution and sales logistics in export markets.”
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The data by the directorate came a day after an analysis by Kenya Tea Development Agency (KTDA) showed the average tea prices for its factories dropped by 13.3 per cent per kilo to $2.22 (Sh241) in the past seven months to January 2021. KTDA Management Services Managing Director Alfred Njagi said the drop was attributed to high tea production in the region coupled with global oversupply.
According to the Tea Directorate, the volume of tea exported during the year increased four per cent to 518.9 million kilos compared to 496.75 million kilos in 2019 due to favourable weather. Kenya is among the leading producers of black teas, which are used to blend teas from other parts of the world to enhance flavour.