Small-scale tea grower earnings grew by more than half to Sh20 billion in the third quarter of the year, helped by the government-backed minimum price of $2.43 (Sh291) per kilogramme that protected their revenue.
Kenya Tea Development Agency (KTDA) says the earnings were more than the Sh13 billion that was recorded in the corresponding period last year.
The impressive earnings were recorded despite a 13 percent decline in the production of green leaf.
KTDA says green leaf deliveries by farmers to 71 factories that it manages dropped to 197 million kilos in the July-September period compared to 225.8 million kilos last year, with the decline attributed to poor rainfall.
A kilo of tea in the review period fetched $2.65 (Sh318), up from $2.55 (Sh302) in the corresponding quarter last year.
The agency says the outlook for the remainder of the year looks promising, coming as a big boost to farmers who will be expecting good returns should the trend hold.
“Prices at the auction have been fairly steady with a positive outlook expected for the coming weeks despite the market challenges faced with the Russia-Ukraine war and the flooding disaster that recently hit Pakistan,” KTDA chief executive officer Wilson Muthaura said.
The Russia-Ukraine war cut tea demand globally as it disrupted the product’s demand as economies suffered high inflation due to the war.
Pakistan, a key buyer of Kenyan tea that accounts for nearly 40 percent of the total exports, recorded lower-than-expected uptake due to the economic disruption.
Prices for KTDA-managed factories continued to outperform the aggregate Mombasa auction as buyers paid keen interest on the quality of the beverage.
The average price at the auction stood at $2.28 in the latest sale.
Mr Muthaura added the agency has procured 84,550 tonnes of the NPK fertiliser for distribution to farmers ahead of the short rains to boost output.
KTDA also continues to intensify its efforts in curbing costs by improving operational efficiencies through a number of interventions.
These include investment in small hydropower stations for cheaper power supply, diversification to orthodox teas to reduce reliance on Black crush, tear, curl (CTC) teas and training of farmers on income diversification and management.
Eleven factories affiliated with KTDA are now producing orthodox teas. They are Itumbe, Kimunye, Michimikuru, Kangaita, Imenti, Kiru, Thumaita, Gitugi, Kagwe, Matunwa and Chinga.
There are plans to increase this number of factories to meet the market demand for the product.
KTDA said earlier it is seeking Sh800 million from the government to expand the production line for the specialty teas following a surge in demand at the international market.