Greenleaf production for smallholder tea farmers under Kenya Tea Development Agency (KTDA) rose 4.4% to 611 million kilos in the first half of the 2018/19 (July to December 2018), amid a 17% drop in tea prices over the same period.
This compares to 585 million kilos of green leaf delivered to KTDA-managed factories in the first half of the previous year (July to December 2017).
“The increased production six months to December was largely attributed to the reliable rainfall experienced in tea growing areas, as well as intensified sustainable agricultural practices such as fertilizer application that improved the quality and the quantities of green leaf,” KTDA Group CEO, Lerionka Tiampati said.
The average price of KTDA teas in the first half of 2018/19 sharply dropped to USD 2.71 per kg from USD 3.27 for the corresponding first half of 2017/18. The drop has been attributed to increased tea volumes than the market can absorb and partly to the economic sanction imposed on Iran by the USA.
Other tea producing countries such as India and Malawi also reported higher tea production in 2018 adding to global tea stocks which pushed prices down. India, currently experiencing winter, will soon be reporting higher production, which could further affect global prices. Indications point to continued weakening of prices, which will significantly affect farmers’ earnings at the end of the financial year.
“Farmers should expect lower earnings for the year should this price drop continue. There is still a lot of stock within the global tea supply chain, which is lowering prices. It is an issue of supply and demand and its effect on price,” Tiampati added.
In October 2018, KTDA announced record income of Kshs85.74 billion from the sale of tea supplied by smallholder tea farmers. A total of Kshs62.35 billion (representing 74% of income) was paid out to farmers as monthly and second payments.