Kenya Tea Development Agency (KTDA) affiliated farmers could receive yet another record bonus, driven by strong market prices and a strong dollar.
October continues to record high prices, spilling over from quarter one gains (July-September) when a kilo averaged $2.65 (Sh321.05) at the Mombasa auction.
This is Sh21 more compared to the $2.55 (Sh308.93 ) recorded in a similar period last year, signaling higher returns for farmers who continue to reap from the $2.43 minimum price set in July last year.
“Prices at the auction have been fairly steady with a positive outlook expected for the coming weeks,” KTDA group CEO Wilson Muthaura said.
Auction data shows that the factories have also sold more volumes this year, with the amount of shipped teas at 41 per cent higher than same period last year.
The positive market data comes amidst a 13 per cent drop in farm production as sustained low rains affects output.
Greenleaf deliveries to 71 KTDA-managed factories dropped to 197 million kilos in the July-September period, compared to 225.8 million kilos last year, KTDA quarterly data shows.
Prices for KTDA-managed factories continue to outperform the aggregate weekly Mombasa auction where during the period under review, a kilo has averaged $2.20 (Sh 266.53).
Kenya’s tea exports to top market Pakistan have remained stable despite catastrophic flooding which has affected millions of people.
“We have not seen any impact on exports so far. The market is still stable,” East African Tea Trade Association (EATTA) managing director Edward Mudibo told the Star.
Pakistan is the biggest importer of Kenya’s tea, taking up 38 per cent of the total weekly sales at the Mombasa auction.
It is followed by Egypt (18%), the UK(9%), UAE, Russia and Sudan each five percent, Yemen (3%) while Afghanistan and Poland each take up two per cent share of the exports.
The strong dollar to the shilling, which exchanged at 121.15 yesterday, sets farmers for yet another good run in the current financial year ending June 30, 2023.
In June, KTDA paid out Sh62.89 billion for the financial year 2021/22, the highest ever paid to farmers in a year.
Payment was Sh51.94 billion in 2020, Sh46.45 billion in 2019 and Sh62.36 in 2018.
Despite the market challenges faced with the Russia-Ukraine war and the flooding disaster that recently hit Pakistan, KTDA foresees a stable export market.
To cut production costs, KTDA has embarked on improving operational efficiencies.
These include investment in small hydropower stations for cheaper power supply, diversification to orthodox teas to reduce reliance on Black teas and training of farmers on income diversification and management.
Itumbe, Kimunye, Michimikuru, Kangaita, Imenti, Kiru, Thumaita, Gitugi, Kagwe, Matunwa and Chinga tea factories are now producing orthodox teas that fetch premium prices.
There are plans to increase the number of factories producing orthodox teas to meet the market demand for the product, KTDA said.
The agency is owned by 650,000 small-scale Kenyan farmers and it exports over 300million kilos of tea annually, predominantly black CTC tea.
The new tea lines, which include purple, white and green teas are part of the agency’s vision to diversify product offering to the global market.