Tea sales rise to Sh33bn on weak shilling

Tea earnings grew 24.5 per cent in the first three months to March, helped by a weaker shilling to the US dollar in what could translate to higher farmers’ bonuses.

Official data shows that Kenya earned Sh33 billion from tea sales compared to Sh26.5 billion in a similar period in 2015, marking a growth of Sh6.5 billion.

Tea is the second largest foreign exchange earner for the country, after remittances from Kenyans abroad, making the beverage a key pillar for the economy.

The quantity of tea exports dropped by 324 tonnes to 117,431 tonnes in the first quarter of the year, showing the rise in earnings was powered by the weakening of the shilling against the dollar — currency used for international transactions.

The shilling traded at an average of Sh101 in the year to March against the dollar, compared to Sh92 in the same quarter of last year, which translated to gains in foreign exchange.

READ: Increased coffee, tea sales lift Kenya exports growth to 8-year high

This means local farmers made more shillings this year when they exchanged their dollars to the local currency.

The bullish dollar also helped cushion farmers from a drop in global tea prices in the review period.

Tea prices dropped to an average of $2.2 (Sh220) per kilo in March, from $2.5 (Sh250) same month last year, according to Global Tea Holdings.

At Sh33 billion, tea accounted for 22.4 per cent of the country’s total exports (Sh146.9 billion) in the year to March.

This makes it the single largest agricultural export commodity for the local economy. Kenya is the world’s biggest exporter of black tea with its traditional markets being Egypt, Sudan, Afghanistan and Pakistan —the largest market for the beverage from Nairobi.