Economy

Tea farmers losing Sh4 a kilogramme on declining price

tea

A worker picks tea. FILE PHOTO | NMG

geraldandae

Summary

  • Tea farmers are operating at a loss of Sh4 a kilogramme following a decline in the price of the commodity, the Ministry of Agriculture has said.
  • Agriculture Cabinet secretary Peter Munya says the cost of producing a kilo of the beverage stands at Sh183, but tea is now fetching an average of Sh179.

Tea farmers are operating at a loss of Sh4 a kilogramme following a decline in the price of the commodity, the Ministry of Agriculture has said.

Agriculture Cabinet secretary Peter Munya says the cost of producing a kilo of the beverage stands at Sh183, but tea is now fetching an average of Sh179 a kilogramme at the tea auction.

This means farmers are taking a loss of Sh4 a kilo, which could trigger a switch to other crops if the low prices remain sustained.

Tea price at the auction —which determines farmers payouts — has dropped from Sh216 in January following a low demand in the global market amid a glut from top producing countries.

“This price is not only lower than the previous years but is also almost at par with the cost production, which currently stands at approximately $1.70 (Sh183) and therefore not sustainable as farmers are now operating at a loss,” he said.

Tea price has remained below Sh183 a kilo for the past month. The low price is set to impact farmers’ earnings at a time when they are grappling with the high cost of production for farm inputs like fertiliser and labour.

Mr Munya said low tea price is a threat to the livelihoods of more than 620,000 smallholder farmers and the socio-economic growth.

“If this worrying trend is not urgently addressed, there is a high risk that farmers may abandon the tea farming and shift to other economic activities, thus affecting the over 6.5 million Kenyans who depend on the tea value directly and indirectly,” he said.

The low price has seen the ministry and the industry players differ over the actual cause of the declining value of Kenya’s leading foreign earner.

Whereas the government has been reading malice, stakeholders argue that the low price has been occasioned by an increase in volume globally amid diminishing demand for the produce in the world market.

Mr Munya said going by the production in the first five months of the year, which stood at 230 million kilos against 254 million the same period last year, the volumes are already 24 million kilos lower.