Kenyan tea costs drop by 2.6% amid surge in manufacturing, foreign money depreciation | Meals Enterprise Africa

KENYA – The Africa Commerce Brokers Restricted has revealed the common value of Kenyan tea bought on the Mombasa public sale dropped by 2.6 % within the first eight months of 2024.

This decline comes as native tea manufacturing surged by 17 %, contributing to a difficult 12 months for tea farmers who’re additionally grappling with the depreciation of the Kenyan shilling. 

In accordance with the report, the common value of tea on the Mombasa public sale has fallen to US$2.2 (KES 283.5) per kilogram, down from US$2.26 (KES 290.97) throughout the identical interval final 12 months.  

The decrease costs sign lowered earnings for tea farmers this 12 months, including to the monetary pressure attributable to the weakening Kenyan shilling.  

The shilling has depreciated considerably, with the alternate fee dropping from about KES128.75 per US greenback in January to round KES 163 presently. 

This contrasts sharply with final 12 months when tea farmers loved report earnings.  

Over 600,000 farmers affiliated with the Kenya Tea Growth Company (KTDA) obtained a report bonus fee of KES 44.15 billion (US$342.59M), bringing complete earnings to KES 67.7 billion (US$521.22M) for the monetary 12 months ending June 2023.  

The excessive earnings had been pushed by a mixture of upper tea volumes and a weak shilling. 

The present 12 months has seen a pointy improve in tea manufacturing, with the Tea Board of Kenya (TBK) reporting a 17 % rise in output to 321.09 million kilogrammes within the first six months of 2024, up from 273.64 million kilogrammes throughout the identical interval final 12 months.  

The surge in manufacturing is attributed to favorable climate circumstances, together with larger precipitation throughout the El Niño season and enhanced rainfall throughout the lengthy rains (March-April-Could) season. 

The rise in output has additionally been supported by the federal government’s fertiliser subsidy program, which lowered the price of this key enter for farmers.  

The federal government distributed 97,974 tonnes of fertiliser to farmers at a sponsored value of KES 2,500 (US$19.40) per 50 kg bag, boosting manufacturing.  

Of this, 92,700 tonnes had been procured and distributed via the KTDA, whereas an extra 5,274 tonnes had been disbursed by way of the Kenya Nationwide Buying and selling Company.