The average price of Kenyan tea at the Mombasa auction has declined by 2.6% in the first eight months of 2024, reflecting increased local production and signaling lower earnings for tea farmers. According to new data from Africa Tea Brokers Limited, the price per kilogram of tea at the auction dropped to KES 283.25, down from KES 290.97 during the same period last year.
The Mombasa tea auctions, organized by the East African Tea Trade Association, serve as a crucial platform for Kenyan tea sales. The recent decline in prices is attributed to a surge in production, which has risen by 17% this year.
Data from the Tea Board of Kenya indicates that green leaf production reached 321.09 million kilograms in the first half of the year, compared to 273.64 million kilograms during the same period in 2023.
The increase in production has been driven by favorable weather conditions and government interventions. “Higher production was due to relatively higher precipitation recorded during the period January to March occasioned by El-Nino weather conditions as well as enhanced rainfall during the ‘long rains’ (March-April-May) season,” the Tea Board of Kenya reported.
In addition, the government’s fertiliser subsidy program played a significant role in boosting output. The program distributed 97,974 tonnes of fertiliser to tea farmers at a subsidized cost of KES 2,500 per 50kg bag.
“Production was also boosted by effects of fertiliser application which was supplied to the farmers under the government fertiliser subsidy programme as well as the commissioning of three factories that offered additional processing capacity,” the board noted.
However, the lower tea prices are a blow to farmers, particularly in the context of a stronger Kenyan shilling. The shilling has appreciated against the US dollar this year, with the exchange rate hovering around KES 128.75 compared to lows of KES 163 in January. This contrasts sharply with last year when farmers enjoyed record earnings due to higher volumes and a weaker shilling.
Last year, more than 600,000 tea farmers affiliated with the Kenya Tea Development Agency (KTDA) received a record bonus payment of KES 44.15 billion, bringing their total earnings to KES 67.7 billion for the financial year ending in June 2023. This year, however, the combination of lower prices and a stronger shilling suggests a challenging financial outlook for Kenya’s tea growers.
