Kenyan tea prices have slumped to their lowest level in at least five years. This has been attributed to excess supplies and weak demand in the main export markets, according to the East African Tea Trade Association (EATTA).
Kenya is the leading exporter of black tea in the world and the crop is also one of its top foreign exchange-earners, along with tourism, flower exports and cash sent home by the diaspora.
The average price of Kenyan tea at the weekly auction in the port city of Mombasa has fallen to $1.80 per kilogram, said EATTA, which represents growers, buyers, brokers and tea packers in 10 countries in the region.
That, compared with last year’s average price of $2.58, and the industry’s cost of production of around $2, EATTA said. The last time average weekly prices dipped below $2 was in 2014, according to EATTA managing director Edward Mudibo.
Meanwhile, the Kenyan shilling sank to a near five year low earlier this week, partly due to concerns about export earnings in the wake of the slump in the price of tea.
Mudibo blamed the oversupply on stocks that were held over from last year when Kenya had a bumper tea crop.
Mudibo further explained that at the same time, global output from last year was 5.85 billion kilograms against consumption of 5.61 billion kilograms, leaving a surplus of 240 million kilograms.
Economic challenges in the top three importers of Kenyan tea – Pakistan, Egypt and Britain – had also led to a reduction in demand.
Mudibo adds while calling on action to be taken to stem the glut that;
“The farmers should face the reality that they will not get a good bonus this year, it will be lower than last year”.
“The focus should now be on the quality of the tea rather than volumes. We should not be proud of the quantities. We are calling for a go-slow in terms of increasing the acreage under tea.”
He also called on farmers to switch to speciality teas, like purple tea, which attracts higher prices from health-conscious consumers.
Officials in the government’s Tea Directorate, which regulates the industry, were not immediately available for comment.