Tea prices at the Mombasa auction have hit a three month high in the latest sale driven by high demand from buyers.
The latest rally to Sh297 this week from Sh288 last week marks the third time that the value of the beverage has improved in the last one month after a losing streak in the previous months.
“Strong general demand prevailed for the 131,860 packages available in the market with only 5.87 per cent remaining unsold,” says a tea market report from brokers at the auction.
Tea production was hit by drought which affected most parts of the country in the early months of this year.
The yield for 2017 is expected to drop by double digits due to effects of drought in what is likely to affect farmers’ earnings in the 2017/2018 financial year.
The drought, according to Kenya Tea Development Agency (KTDA) — which manages small scale farmers, cut earnings from Sh84 billion last year to Sh59.7 billion this year.
The record earning last year was attributed to increased sales volume which stood at 272 million kilogrammes compared with 233 million kilos registered in the current financial year.
“The drought that ravaged most tea growing counties between January and April this year left little for the farmers to supply to factories.
‘‘Nyeri and Kirinyaga counties were the worst hit, with production falling by 30.6 per cent and 32.6 per cent respectively,” said KTDA in a statement. The Agriculture and Food Authority said production of green leaf will drop from 473 million kilogrammes in 2016 to about 420 million kilogrammes this year on account of severe drought.
Kenya is the leading exporter of black CTC tea in the world and the beverage earned the country $1.226 billion (Sh127.3 billion) last year, which was a drop of 1.7 per cent from the $1.247 billion (Sh129.4 billion) recorded in 2015.