Capital FM (Nairobi)

Kenya: Tea Export Earnings to Grow in 2013

Nairobi — Kenya's tea export earnings are projected to rise by 4 percent to Sh116 billion in 2013, according to industry regulator Tea Board of Kenya (TBK), which attributes growth to the good weather conditions expected in the first half of the year.

The board's Managing Director Sicily Kariuki revealed that in 2012, Kenya recorded a 2 percent drop in production compared to 2011 due to adverse weather conditions during certain times of the year, but noted that export volumes increased by 9 million kilograms to 430m kilos in 2012, with 2013 expected to produce more.

"Production will grow by a marginal 1 percent to the end of the year, largely on account of favourable weather conditions that will spill over from December to the first half of the year," she said.

"We do anticipate that from export earnings we are likely to get a 4 percent increase and we anticipate that the tea prices will remain stable," she added.

In 2012, Kenya's tea production dropped from 377.9 million kgs in 2011 to 369.5 million kgs, however Kariuki added that tea export earnings for the world's largest exporter of black tea rose 3 percent last year to Sh112 billion from Sh109.4 billion the year prior, due to a stable foreign exchange rate and favourable global prices.

She emphasised the importance of growing non-traditional markets in order to spur trade through the implementation of the Kenya Tea Industry Promotion Strategy and noted that the board is looking for new uses of tea in order to diversify their consumer base.

"Tea is moving towards medicinal usages and we have also see tea by products used for cosmetic and detergent use. The tea seed itself has also been extracted as tea oil, which we understand from chemical analysis' that it's comparable, if not better to olive oil," she explained.

She noted that the first quarter of the year was characterised by severe dry weather conditions as well as the delayed onset of the long rainfall season, resulting in a decline of production, but pointed out that it was still much higher than the outputs recorded in 2008 and 2009, during which similar weather conditions were experienced.

She attributed this sustainability to the formation of the Kenya Tea Industry Promotion Strategy, a framework undertaken by KTB to sustain traditional markets, develop emerging markets, while pursuing value addition.

"During the plan period, and working in conjunction with stakeholders and other government agencies, the industry has made some inroads in some of the potential markets such as Russia, UAE, USA, Iran, China, Japan, Nigeria and Poland," she said.

She further added that, "TBK introduced the Kenya Tea Mark of Origin with the objective of branding 100 percent pure Kenyan tea to the global markets, in order to enhance the country's visibility, with the ultimate goal of raising its value and improving returns to stakeholders."

Kariuki revealed that so far, close to 20 stakeholders have been duly certified to use the mark and many more are expected to come on board and she announced that TBK has kicked off its Strategic Plan for the period 2013 to 2018, designed to respond to the aspirations of the tea stakeholders.

"One of the key features of this process is the deliberate involvement of all stakeholders with a view to ensuring that their concerns and interests are incorporated," she said.

"As we deepen our results-based management practices, expect more customer focus, improved quality service and equity at TBK," she added.

In 2012, the local tea consumption stood at 22.7 million kgs, which was 13.6 percent higher than last year's total of 20 million kgs.

"Higher local consumption is a consequence of a sustained promotion campaign by the Tea Board of Kenya, intensive brand promotion by the tea packers as well as intense sales by factories through factory door sales," Kariuki stated.

She revealed that over the last five years, local tea consumption has been growing at an average rate of 3 percent per annum and earnings for 2012 stood at Sh14.9 billion compared to Sh13.1 billion in 2011.

Total industry earnings went up 4 percent to stand Sh127.1 billion, with Sh112.2 billion coming from exports and Sh14.9 billion coming from local sales.

"Going by the trend over the last five years, output for 2013 is projected at Sh373 million kgs, which is 1 percent more compared to 369 million kgs in 2012, and tea prices are expected to hold at an average of Sh280″ she noted.

Kariuki added that out of the Sh116 billion projected as export earnings in 2013, local tea sales are projected to make up Sh16.9 billion of the total, a 14 percent increase from Sh14.9 billion in 2012.

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