Kenya tea export grows by 50 per cent

Afghanistan maintained its run as Kenya’s fastest growing tea export destination, realising a 211 per cent growth in February compared to a similar period last year.

The trend came as the country’s total export volumes of the commodity over February grew by 50 per cent compared to last year, backed by improved production locally.

Though Egypt maintained the lead as the single largest buyer among the 33 markets served by Kenya over February, Afghanistan kept its record as the fastest growing.

According to the Tea Board of Kenya (TBK), Egypt took in nine million kg of tea from Kenya, accounting for 24 per cent of total exports.

Other key export destinations for Kenyan tea were the UK which imported 6.7 million kg, Afghanistan (5.6 million kg) Pakistan (4.6 million kg), and Yemen (1.7 million kg). The five export destinations accounted for 74 per cent of Kenya tea export volume.

“Among the five export destinations, the Afghanistan market recorded the highest growth in Kenya tea export at 211 per cent compared to the same period of last year, followed by Yemen (81 per cent ), Egypt (78 per cent), Pakistan (35 per cent ) and the UK (21 per cent),” TBK managing director Sicily Kariuki said.

Though celebrated by Kenya, the phenomenal growth of Afghan tea imports has since last year drawn protest from once leading buyer Pakistan, amid claims that the sudden upsurge in imports by Afghanistan is fuelling smuggling of the commodity into her market.

The Pakistani Tea Association estimates that close to 70 million kilogrammes of the commodity is illegally smuggled into the country every month through the Afghan Transit Trade Agreement (ATTA) that offers concessionary trade terms.

The ATTA was initiated in 1965 as part of a deal by Pakistan to help its landlocked neighbour open up to international trade.

Tea was, however, only added to the list of products covered under the programme in 2004, effectively opening up avenues for smugglers.

Value-added tax

Analysts said the vice is flourishing because while Pakistan currently charged 10 per cent import duty, alongside a 15 per cent sales tax and an additional 10 per cent value-added tax and another two per cent income tax on imported tea, smugglers charged between 15-20 per cent overall duty on their consignments.

During the month of February, Kenya’s total tea exports stood at 37.5 million kg compared to 25 million kg recorded same period of last year.

“Tea production for the month of February 2010 stood at 34.8 million kg, 61 per cent higher compared to 21.5 million kg recorded in February 2009. The output for the month was also higher by 45 per cent compared to 240 million kg recorded in February 2008, but matched production for the similar period of 2007,” TBK said, attributing the growth to goods rains that have pounded key growing areas since late last year.

Mrs Kariuki said apart from the traditional outlets for Kenyan tea, there was also significant growth in other destinations such as Europe, North America, and Asia due to increased demand occasioned by higher consumption during the winter season.

The western world experienced a severe winter which triggered massive disruptions of transport systems in several countries and even caused damage to key infrastructure facilities.

The adverse weather conditions have tended to work in favour of beverage commodity producing nations such as Kenya with consumers in the countries affected by winter preferring to take tea and coffee to keep warm.

And on a lifting development for traders prices of tea remained strong at the Mombasa auction defying a sharp rise in the size of volumes offered for sale. According to TBK, some 23.9million kg was sold at the auction over February--marking a 36 per cent growth over a similar period of 2009.

“Similarly, the average tea prices was higher at $3.13 per kg compared to $2.29 recorded in February 2009. This happening against the backdrop of rising costs of production is a welcome development,” Mrs Kariuki said.