Tea growers in Kenya’s Rift Valley region are contending with a substantial decline in earnings, driven by a sharp drop in tea prices at the Mombasa auction. Several factories have informed growers of significant reductions in payment for green tea leaves, some plummeting to as low as KES 19.0 per kilogram, effective December 1, 2023.
In correspondence to its farmers, Chemusian Tea Estate Ltd explained that the adjustment to KES 19.0 per kilogram was in response to persistently poor market conditions. Likewise, Kuresoi Tea Factory reduced its green leaf price by 10.7% to KES 25.0 from the previous KES 28, while Kisyet Tea Limited decreased payouts by 11.1% to KES 24.0 from KES 27.0, both citing the decline in tea prices at the auction. Greenfields Tea Factory Limited also cut its payout to KES 25 gross, including transport costs, attributing the decision to the impact of depressed international tea markets.
These factories emphasized their commitment to monitoring developments in the tea market and adjusting payouts accordingly. The average tea price per kilogram at the Mombasa auction dropped by 11.1% to USD 2.4 (KES 367.0), a considerable drop from the peak of USD 2.7 (KES 419) in February 2022.
Despite the weakening of the Kenya shilling somewhat mitigating the decline, global factors continue to exert pressure on local tea prices. According to a World Bank report, the Commodity Markets Outlook forecasts a further 2.0% decline in tea prices globally in the coming year.
This downturn is attributed to robust leaf supplies from major producers like India and East African countries, including Kenya, the largest tea supplier in East Africa. Additionally, weak demand from key importers, such as Iran, has contributed to the challenging market conditions.
The situation poses a looming economic challenge for Kenyan tea producers as they grapple with the impact of both local and global factors on their livelihoods. With tea prices continuing to fluctuate, the resilience of the tea industry in the Rift Valley will be tested, necessitating innovative strategies to navigate the tough times ahead.
