Tea Prices Drop by 12% in the Country

The average tea prices for factories managed by Kenya Tea Development Agency (KTDA) have dropped to Ksh 238.78 ($2.22) from Ksh 276.16 ($ 2.52). These prices have been compared in a period of nine months leading up to March 2021 resulting in a 12% drop. The decrease in prices has mainly been attributed to high production and oversupply of tea globally.

Tea production has also dropped by 8.6%. Data collected by KTDA shows that 218.9M Kilos of tea were processed by factories. This is compared to 239.6M kilo processed the previous year.

Despite the drop in prices, KTDA prices have been 17% higher than the average tea price at the Mombasa auction. The Agriculture and Food Authority (AFA) has also cited the Covid-19 pandemic as a major cause for the continuous price drop.

“Demand has also been affected to some extent by reduced consumer purchasing power due to the effect of the global economic recession that is perpetuated by the Covid-19 pandemic as well as the devaluation of some foreign currencies against the US Dollar”, AFA stated in a Tea Industry performance report for February.

The authority also stated that there is an expected reduction in tea production as the year progresses because of changing weather patterns being experienced.

The high tea production in Kenya is however a result of favorable weather conditions in the period of the past year. There has also been an expanded acreage of tea over the years.

Data from the Kenya National Bureau of Statistics (KNBS) shows that smallholder tea farmers, including those that deliver tea to KTDA-managed factories, have been increasing the volume of land being planted tea. In 2019, the tea-covered area had risen to 163,000 hectares from 141, 800hectares in 2018. This increase of land covered by tea plantations has also led to the increase in tea volumes on offer in the tea market.

By Joy Ngoiri