Sh129 billion tea sales boom for farmers

Traders at a tea auction at the Tea Trade Centre in Mombasa. FILE PHOTO | NMG
Traders at a tea auction at the Tea Trade Centre in Mombasa. FILE PHOTO | NMG 

Kenya’s tea earnings rose Sh129 billion last year, buoyed by higher prices at the Mombasa auction, making the green leaves the second highest earner of forex for the East African nation.

The value of tea exports increased from the Sh120 billion recorded in 2016 to Sh129 billion last year, despite a seven percent decline on yields caused by prolonged dry weather.

The outcome has positioned tea as Kenya’s second forex earner after diaspora remittances, which stood at Sh178 billion in 11 months to November 2017. Horticulture came in third at Sh85 billion.

Higher export earnings have been attributed to an increase in the price per kilo of tea and a stable exchange rate against the US dollar. A kilo of tea traded at Sh303 last year at the Mombasa auction compared to Sh240 in 2016.

“Improved earnings are attributed to sustained demand of our tea in key and emerging markets, coupled with a stronger dollar in the period under review,” said Samuel Ogola, head of the Tea Directorate, the agency that produced the report.

Export volumes stood at 415 million kilos in 2017, down from 480 million kilos the previous year.

Tea farmers affiliated to the Kenya Tea Development Agency (KTDA) earned a total of Sh78 billion in the last financial year, compared to the Sh84 billion they earned in the previous year.

KTDA represents more than 600,000 smallholders, who supply tea to the agency and earn Sh14 per kilo supplied every month.

The second payment is made at the end of every financial year and is determined by performance of the commodity at the auction.

Currently, multinationals export up to 90 per cent of the total tea produced in Kenya while small traders account for the remaining 10 per cent.

Multinational firms in Kenya account for 30 per cent of the total tea available at the auction for trading.

Last year, the directorate signed a memorandum of understanding with the Export Promotion Council (EPC) to provide SMEs with expert coaching on access to export markets as well as help build their capacity and knowledge on making international enquiries from overseas customers.

The EPC coaching programme targets tea enterprises, which are trained on technical aspects of international tea trade, trade finance, product development, export market penetration and brand development.

Kenya is the leading exporter of black crush, tear, curl (CTC) teas in the world, accounting for about 24 per cent of the global exports.

The country exports the bulk of its teas to Egypt, the UK, Pakistan, Afghanistan, Iran, Sudan, Yemen and the UAE. 

The Tea Directorate is scouting for new markets to cut overreliance on the traditional ones.

Kenya has been relying on these top buyers of the country’s tea, who account for over 90 per cent of the total exports.

The directorate is currently banking on emerging markets and an increase in local consumption to improve the sale of the commodity and boost farmers’ earnings.

Last year, local consumption of tea increased from 29.7 million kilos to 37.6 million kilos, accounting for Sh15 billion in local sales.