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Good tea prices welcome, but will momentum last?

By Titus Too | August 15th 2015

The latest tea prices at Mombasa auction is giving a ray of hope to farmers who had lost confidence in one of the country’s leading exports.

Farmers have in the last few years decried dwindling earnings with some in Nandi County contemplating uprooting the cash crop to create room for alternative agricultural ventures that can generate better income.

But speaking to Smart Harvest recently. The farmers are now clinging on the hope that the current prices will be sustained. The strength of the dollar against the shilling has given them an advantage of gaining more earnings through the auction, which uses the dollar.

Wilson Tuwei, chairman of small scale tea farmers who supply the produce to multinational tea companies in Nandi Hills, however, termed the latest prices as ‘tricky’ saying there is no surety that it will be maintained.

“The latest prices may not make a difference at the end of the year because it just started appreciating in June while it was at low between January and April,” says Tuwei.

The farmers will miss out this year because of low volumes towards the close of the crop season in June. This means they can only reap the dividends from this financial year, which started last month, depending on whether the high prices hold.

In March, the Kenya Tea Development Agency (KTDA) had cautioned farmers not to expect improved earnings this financial year arguing that auction prices were likely to remain unchanged due to dry spells.

Tuwei also noted that climate change brought a lot of unpredictability in the region bringing with it dry and cold weather patterns that has reduced tea volumes.

Tea auction prices have gone up to over $3.5 per kilo this week. Tuwei says anything above $4 per kilo will be good for farmers.

Nandi County is one of the leading producers of tea, an agricultural sub-sector that is also a source of employment to thousands of workers.

The chairman noted that although earnings from tea is improving, labour costs and inputs is eating up the income generated by farmers.

“Farmers will generate better earnings if this sector is mechanised. We appreciate government intervention to provide subsidised top dressing fertiliser and appealed to agencies to ensure that all farmers irrespective of production acreage access the input,” he says.

Tuwei says tea earnings have started to pick up and he urges farmers who had despaired not to uproot their crop but instead expand production.

Players in the industry are aware that prices are dependent on global demand and supply.

Despite the good prices, volumes of green tea leaves drastically reduced by 50 million kilogrammes of green leaves compared to the same period last year.

Joseph Lagat, a director with Siret Tea Company Limited, a small scale farmer’s tea firm in Nandi County says the amount of green leaves has dropped because of the heavy rains and cold weather

Lagat, who is also a former director with Eastern Produce Company (EPK) Limited expresses fear that prices might sink once green tea supply improves in the next few weeks.

“Farmers have done second application of top dress fertiliser during the ongoing wet season. We expect warmer temperatures towards the end of this month and this will be favourable for production and supply is expected to increase,” said Lagat.

Lagat points out that tea earnings can be enhanced and stabilised through value addition.

“We should have a Kenyan quality brand and encourage local consumption to reverse the current trend where we consume only four per cent and sell 96 per cent,” he says.

He adds that Kenyan tea has good properties for health and there is need for value addition and packaging so that it can be sold as a finished product.

Lagat regrets that middlemen are reaping huge profits through use of Kenyan tea for blending products from other countries.

“Some of the products end up in our supermarkets and sold at high prices as imports yet they were blended with our own products,” he observes.

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