Kenya Tea Development Agency (KTDA), the largest black tea exporter, confessed that tea prices in the first three quarters of 2018/19 had declined to Sh262 a kilogramme, compared to Sh325 paid out during a similar period of 2017/18.
The strengthening of the Kenya shilling against the greenback by 1.6 percent has adversely affected the tea prices, making smallholder tea farmers experience a 19.3 percent fall in earnings per kilogramme in the past nine months.
KTDA Group chief executive Lerionka Tiampati said the situation had further been worsened by high production of tea in other parts of the world, especially India, thereby generating new tea stocks.
“Despite the reduction in production due to drought, it is not anticipated that prices will improve significantly between now and the close of the financial year in June 2019. Farmers should therefore expect to receive lower total earnings for their produce this year,” said Mr Tiampati.
He said economic sanctions imposed on Iran by America and high inflation rates in Egypt had also negatively impacted the tea market.
During the period under review, smallholder tea farmers under KTDA delivered 868.9 million kilogrammes, higher than the July 2017 to March 2018 period that reported 824.8 million kilogrammes, to KTDA managed factories.
Mr Tiampati said increased rainfall as well as intensified sustainable agricultural practices such as fertiliser application largely contributed to high production.
Last October, KTDA paid out Sh62.35 billion to smallholder farmers, as monthly and second payments amounting to 74 percent of the Sh85.74 billion realised from tea exports.
According to Central Bank of Kenya data, total tea export earnings stood at Sh140.86 billion in 2018, behind diaspora remittances (Sh272 billion), tourism receipts (Sh157.36 billion with Sh153.7 billion received from horticultural exports.