- The Kenya Tea Growers Association (KTGA) said the harsh climatic conditions have forced factories to operate three to four days a week, significantly cutting down on operations.
- The drop in factory operations is expected to cut Kenya’s tea export earnings this year as traders at the weekly auction reported lower prices on quality concerns.
- Tea prices have hit a four-year-low with a kilo fetching Sh193 down from about Sh270 in the same period last year.
More than 40,000 tea estate workers have proceeded on forced leave as drought conditions halved production in factories, dealing a blow to their wage earnings.
Workers in tea factories are paid a monthly minimum wage in addition to Sh13.50 per kilo of plucked tea.
The Kenya Tea Growers Association (KTGA) said the harsh climatic conditions have forced factories to operate three to four days a week, significantly cutting down on operations.
“The industry is currently grappling with harsh climatic conditions. The current extended drought from October 2018 to date is the longest and worst ever and has caused the tea bushes to wither and, in some instances, to dry up completely,” KTGA chief executive, Apollo Kiarii told the Business Daily.
“Production has dropped significantly, in some instances to below 50 percent. Operations have had to be scaled down both at garden and plucking activities and factory level, meaning some workers have had to take advance leave as there is little to keep them fully engaged,” he added.
The drop in factory operations is expected to cut Kenya’s tea export earnings this year as traders at the weekly auction reported lower prices on quality concerns.
Tea prices have hit a four-year-low with a kilo fetching Sh193 down from about Sh270 in the same period last year.
Mr Kiarii projected that it would take another six to eight weeks for the crop to recover should the forecasted March-April-May rains come to pass.
But even with good rains, the financial fortunes of the industry will still take a hit this year because of the additional cost of replanting and infilling the fields for the dried-up bushes.
Tea is the largest employer in the rural economy and contributes highly to the social and economic sustainability of the counties where it is grown.
The commodity is a major foreign exchange earner and last year brought in Sh140 billion, which was one of the impressive performances in recent years.
The Kenya Tea Development Agency (KTDA) has already warned farmers of low earnings this year following a decline of 17 percent in the price of the beverage in the first half of 2018/2019 financial year.
The average price of KTDA teas in the first half of the review period sharply dropped to Sh271 per kg from Sh327 for the corresponding first half of 2017/18 occasioned by high volumes.
The price is the lowest witnessed by the agency in the last five years in what could spell doom to farmers’ earnings.
The KTDA said indications point to continued weakening prices, which will significantly affect farmers’ earnings at the end of the financial year.
“Farmers should expect lower earnings for the year should this price drop continue. There is still a lot of stock within the global tea supply chain, which is lowering prices. It is an issue of supply and demand and its effect on price,” it said.
The high earnings that tea farmers received in 2018 were boosted by high volumes that defied low international prices of the commodity in the market.
The earnings, which were the highest to be registered in the last five years, saw an increase of Sh11 billion to what was recorded in 2017.
Production reached a high of 474 million kilos in the review period, up from 415 million kilos exported in 2017. The Tea Directorate is forecasting that the volumes will this year drop to 416 million kilos from a high of 474 million kilos realised last year.
“Kenya tea production is expected to come to about 416 million kilos this year, down from what was produced in 2018, which is largely attributed to dynamics in the weather conditions in tea growing zones,” it said.