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Commodities

Lower tea farmer earnings loom as output rises 50pc

Tea production in the first quarter of the year increased 50 percent as favorable weather spurred a glut of the commodity, marking one of the highest outputs in four years.
Tea production in the first quarter of the year increased 50 percent as favorable weather spurred a glut of the commodity, marking one of the highest outputs in four years. FILE PHOTO | NMG 

Tea production in the first quarter of the year increased 50 percent as favorable weather spurred a glut of the commodity, marking one of the highest outputs in four years.

Latest industry report shows production increased to 158 million kilogrammes from 106 million in the same period last year.

The bulk of production was witnessed in March, with volumes increasing to 55.7 million against 26 million kilos in corresponding period last year.

“Cumulative production... is largely attributed to the onset of long rains season characterised high precipitation and sunny intervals experienced across tea growing zones,” said the Tea Directorate.

The report indicates unlike other years, the long rains in March were preceded by a prolonged period of short rains which contributed to good production in January and February.

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However, high volumes of the commodity in the market led to low prices at the auction with a kilo on average selling at Sh223 compared with Sh231 in the previous quarter.

“Lower prices at the auction were attributed to increased supply coupled with depressed demand in the global tea markets occasioned by disruptions and restrictions of movements due to the Covid-19,” said the report.

The prices have been lower since the beginning of the year, hitting a five-month low at one point at the Mombasa auction.

The total volume exported in the review period nearly matched what was shipped the previous quarter with quantities standing at 44.2 million kilos (2020) and 44.7 million kilos (2019).

Stakeholders have already warned the low prices witnessed this year will impact negatively on farmers’ earnings in the financial year ending June.

Small-scale tea earnings dropped by 22 percent in the year ended June 2019, marking the lowest returns for growers in the last six years.

Farmers affiliated to Kenya Tea Development Agency earned Sh69.7 billion in the last financial year compared with Sh85.7 billion in 2018.

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