Tea farmers have been handed a boost as tea prices at the Mombasa auction hit $3.41 (Sh443) per kilogramme in February, which is a jump of 29.1 per cent compared to the price the green leaf fetched in the same month last year.
This is a significant increase compared to an average price of $2.64 (Sh343 at current exchange rates) in February last year as an increase in global demand for the beverage lifted prices.
Due to the high demand for the beverage especially from traditional markets such as Europe and North America, the Central bank of Kenya (CBK) has tipped Kenya to export a higher quantity of tea this year.
“Positive prospects for improved tea exports in 2024 on account of the pick-up in global tea prices,” said CBK Governor Kamau Thugge in a presentation to the National Assembly’s Budget and Appropriations Committee last week.
According to the Food and Agriculture Organisation (FAO), global tea consumption expanded by two per cent in 2022 compared to 2021, and further increased in 2023, as the market continues to be underpinned by robust demand.
Higher tea prices this year come on the back of good performance by the sector last year, as exports of the green leaf grew by 16 percent to 522.92 million kilogrammes.
The increase in volumes –as well as a weaker shilling– pushed tea earnings up 31 per cent to Sh180.57 billion up from Sh138.09 billion in 2022.
As a result, tea farmers affiliated with 54 factories under the Kenya Tea Development Agency (KTDA) received a record bonus payment of Sh44.15 billion for the period to June 2023.
As a matter of policy, the agency pays at least 30 percent of its earnings to tea farmers as a bonus.
This brought to a total of Sh67.7 billion – inclusive of monthly payments – that the farmers received during the period.
But even as the higher prices for the green leaf are a boon for tea farmers, a rapid appreciation of the Kenyan shilling against the US dollar in recent months has denied them a bigger increase in earnings.
