Commodities

Rift Valley tea factories cut farmer payouts on falling auction prices

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Workers load bags of green tea leaves at a factory in Kericho. FILE PHOTO | NMG

Tea growers in Rift Valley will earn as little as Sh19 per kilogramme of tea leaves as factories respond to a decline in the price of the beverage at the Mombasa auction.

The factories in several correspondences sent to growers in the region said the drop in green leaf prices started on December 1.

“This is to inform all our esteemed farmers that we will be adjusting our prices to Sh19 per kilo (net) effective December 1, 2023,” Chemusian Tea Estate Ltd wrote to its farmers.

“This price adjustment has been necessitated by the persistent poor market conditions that have been progressively going downwards.”

Kuresoi Tea Factory on the other hand cut its green leaf price per kilogramme to Sh25 from the previous Sh28 effective the same date.

Kisyet Tea Limited reduced its payout to farmers to Sh24 from Sh27, citing the decline in tea prices at the auction.

Greenfields Tea Factory Limited on its part cut its payout to Sh25 gross inclusive of transport. The factory said the review was due to depressed international tea markets.

The firms said they will continue to monitor developments in the tea market and review their payouts accordingly.

Tea prices per kilogramme at the Mombasa auction have declined to an average of $2.4 (Sh367) currently from a high of $2.74 (Sh419) in February 2022.

Some of the price decline has been mitigated by the weakening of the Kenya shilling which has the effect of boosting revenue in local currency terms.

Global prices of tea are expected to decline further next year, signalling tough times for Kenyan producers, a new World Bank report has indicated.

The World Bank’s latest Commodity Markets Outlook had predicted a further dip in prices of tea by two percent next year reflecting robust leaf supplies including from Indian and East African producers.

“Lower tea prices reflect robust supply from major producers and exporters, including India and Kenya (East Africa’s largest tea supplier) as well as weak demand by key importers, including Iran,” said the World Bank in the report published in October.

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