Agri-stocks flourish on strong market prices

“The improved performance is due to the higher price realisations from tea and coffee sales and improved productivity for tea”, said Caesar Mwangi, the managing director for Sasini.

Mr Musau reckons that with rains expected to continue across the country, productivity especially for tea will increase leading to better returns especially if the high global prices hold.

According to the Central Bank of Kenya (CBK) tea and coffee production is expected to increase due to the prevailing wet conditions across the country.

“Tea production in January 2010 increased by 48 per cent to 12,229 metric tonnes from 7,968.4 metric tonnes in a similar period last year,” said CBK in its February Monthly Economic Review.

The report indicates that the increase in production, which began in September 2009, was attributed to wet weather conditions experienced in the tea growing areas in the regions east and west of the Rift Valley.

However, coffee which is a seasonal crop is yet to recover from the effect of the drought.

“Although coffee is usually resilient to changing weather conditions, it succumbed to the prolonged unfavourable weather conditions as output in January 2010 dipped by 29.8 per cent but it is expected that this trend may not persist as the high season approaches in the next few months,” said CBK.

Double capacity

Mr Mwangi said that the higher global coffee prices made up for the decrease in output.

In order to cushion its income from the cyclic returns due to changing weather pattern, Sasini has diversified into value addition and other businesses along the value chain.

Currently, Sasini is involved in coffee milling operations which involves processing and packaging coffee and tea. It plans to expand the coffee milling to double its current capacity.

In addition, the firm has launched a number of shops to sell brewed coffee.

“Going forward Sasini continues to enhance its marketing efforts, product quality initiatives and efficiency measures in tandem with our diversification strategy,” said Mr Mwangi.