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Why Kenya’s tea export earnings dipped in 2019

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Kenya’s earnings from tea exports dropped by 16.4% last year to 117 billion shillings ($1.16 billion) as production edged down and average prices of the commodity slid.

Made tea production for the year was 458.85 million Kgs. This was 6.95% lower compared to 492.99 Million Kgs recorded in 2018. It was also remarkably higher compared to other record outputs of 439 Million Kgs in 2017 and lower than 473 Million Kgs in 2016. Out of the total production for 2019, the Smallholder sub-sector output was 258.1 million kgs (56.2%) while the Estate sub-sector was 200.7 million kgs (45.8%).

Both sub-sectors recorded decreased output with the greatest decline of 8.95% being registered in estate sub-sector. The decline in the small holder sub-sector was 5.29%.

Owing to increased supply caused by carry-over of stocks from previous year, Kenya tea Auction prices registered a decline from an average of USD 2.58 per Kg recorded in 2018 to 2.21 USD. Tea from other producers in the region also experienced significant reduction in

Auction prices. Lower prices were also attributed to higher supply in tea production within the region owing to favorable weather conditions. The same impact was also felt by other global CTC producing countries, though most of them recording about 2.5 USD per kg.

The decline in CTC global prices worldwide was attributed to increased supply coupled by other global market dynamics.

During the year 2019, was 40.00 Million kgs were consumed locally against 38.03 Million consumed in 2018. Local consumption has been growing consistently at an average rate of 5% per annum for the last five years. Domestic sales value also increased from ksh.15 billion to Kshs. 18 B. The growth in local consumption is attributed to intensive promotion by brand owners and support by Government through the local generic promotion initiatives to position Kenya tea as the preferred beverage of choice globally.

2019 OUTLOOK

Owing to slight rainfall increase experienced in the third Quarter of 2019 and first month of the year; together with predicted depressed rainfall conditions ,Tea production my marginally increase in 2020.

Export volumes are expected to drop by about 50% to reach about 471Million kgs, while export earnings are expected to increase in 2020.

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