Weak shilling, high auction prices earn tea farmers Ksh43Billion

Smallholder tea farmers in Kenya earned Ksh43.25Billion from leaves delivered last year helped by weak shilling and higher auction pricing of the commodity in the world market.

Industry performance data for 2015 released this week shows that growers in Kericho, Bomet and Nandi topped the list of fifteen tea growing zones that received hefty payout for the year 2014 – 2015.

The growth is higher than Sh35.6billion disbursements made in 2013 – 2014 period, representing a rise of 71 percent of the earnings by the smallholder farmers.

According to the report, the three regions also produced a combined 185million kilos against an output of 399.21million kilos in 2015 for the industry compared to 445.10million recorded a year earlier – a slight decline of 10 per cent.

The plantations sub-sector produced 161.6million kilos of the commodity while 237.6million kilograms were realized by smallholder sub-sector.

Tea directorate under the department of Agriculture, Fisheries and Food Authority (AFFA) blamed the low total production on dry conditions during the first quarter of the year.

During the period under review, the value of tea exports also increased by 23 per cent to record a growth of Sh125.25Billion in 2015 compared to Sh101.11Billion the industry earned in 2014.

Earnings from domestic market stood at Sh14.6Billion, taking the industry total earnings to Sh139.85Billion for the whole year – despite a decline in production.

The impressive earnings signals better pay for farmers this year according to the directorate which is already predicting a good year for the sector, saying the growth is likely to be maintained judging by the current market dynamics.

“Despite the decrease in production, export earnings have grown by 28 per cent which has led to increased earnings by the farmers, but we expect 2016 to be sustained if there will be no disruption in weather patterns,” said AFFA director-general Alfred Busolo when releasing the 2015 industry’s results.

Kenya exports the bulk of its tea to five key traditional markets of Pakistan, Egypt, United Kingdom, Afghanistan and UAE which accounted for 72 per cent of the total exports last year – but is keen to add newer markets into its basket like USA, Nigeria and Iran with the lifting of sanctions against the latter country seen as a boost to the Kenya tea industry.

Though Pakistan maintained the lead as the single largest buyer of Kenyan tea among the 68 markets currently being served by Kenya, United Arab Emirates (UAE) recorded an impressive growth as the fastest growing market for Kenyan tea.

Busolo also said that diversification into other commodities as well as the implementation of Electronic auction system will go a long way in which promoting transparency and accountability in the tea auction market which will in turn boost the sector’s revenues.