The average price of Kenyan tea sold at the Mombasa auction has dropped by 2.6 percent in the first eight months of 2024, new data shows, as local production of the green leaf rose by 17 percent.
Data by Africa Tea Brokers Limited shows that the price of tea at the auction has declined to an average of $2.2 (Sh283.25) per kilogramme since the year began down from $2.26 (Sh290.97) during the same period last year.
The Mombasa tea auctions are organised by the East African Tea Trade Association.
This is a double blow to tea growers whose earnings will take a beating from the depreciation of the Kenyan shilling against the US dollar.
The Kenyan shilling has rallied against the greenback this year, with a unit exchanging at about Sh128.75 yesterday compared to lows of Sh163 in January.
This contrasts with last year when farmers made record earnings driven by higher volumes and a weak shilling. Last year, more than 600,000 tea farmers affiliated with the Kenya Tea Development Agency (KTDA) received a record bonus payment of Sh44.15 billion.
This brought their total earnings to Sh67.7 billion – inclusive of monthly payments – that they received in the financial year to June 2023.
The lower prices come when tea production has risen sharply this year.
According to the Tea Board of Kenya, production of the green leaf jumped by 17 percent to 321.09 million kilogrammes in the six months to June.
This is a rise from an output of 273.64 million kilogrammes during the same period last year.
This has been attributed to favourable rainfall received at the back end of last year and extending into this year.
“Higher production was due to relatively higher precipitation recorded during the period January to March occasioned by El-Nino weather conditions as well enhanced rainfall recorded during the “long rains” (March-April-May) season,” said the agency.
The higher output has also been attributed to the State-backed fertiliser subsidy, which lowered prices of the key input.
“Production was also boosted by effects of fertiliser application which was supplied to the farmers under the government fertiliser subsidy programme as well commissioning of three factories that offered additional processing capacity,” said the board.
The subsidy saw the government distribute 97,974 tonnes of fertiliser to the tea farmers at a subsidized cost of Sh2,500 per 50kg bag.
Under the programme, 92,700 tonnes of the input were procured and distributed through the KTDA and a further 5,274 tonnes were bought and disbursed through the Kenya National Trading Corporation.
The fertilizer was applied to the tea bushes between October last year and February this year.
