Higher supply of tea in the global markets has resulted in a decline in Kenya’s prices above the market demand, the Kenya Tea Development Agency (KTDA) said Monday.
This is the third year in a row that prices have declined due to global supply surplus above market demand and in line with a 2018 Food and Agriculture Organization (FAO) market forecast.
Kenya’s volume of green leaf produced by its smallholder tea farmers dropped marginally by 0.7 percent to 615 million kilograms in the first six months to December 2020 compared to 619.5 million kilograms in the same period in 2019.
“High volumes of tea produced in the east African region and elsewhere on the globe have contributed to the continued price decline in the global market,” Alfred Njagi, KTDA Management Services managing director said.
In October, he had said the glut was also partly due to disruptions caused by the COVID-19 pandemic in key export destinations.
The average price per kilo of KTDA teas at the Mombasa Tea Auction dropped significantly by 14 percent to 2.18 U.S. dollars (Ksh 240) from 2.54 dollars recorded in the same period in 2019.
Njagi said the high tea production in Kenya is due to favorable weather conditions during the period, besides the rapid expansion of acreage under tea over the years.
“The impact on tea prices of the commencement of the Tea Act 2020 that requires all black tea exports processed and manufactured in Kenya to be sold exclusively at the tea auction floor will soon be realized,” Njagi, said.
“We are waiting to see the full effects of the new law on the industry in the coming months,” he added.