13 March 2014

Kenya: Tea Bonuses Drop As Supply Increases

Nairobi — An oversupply of tea in the country will see farmers earning reduced bonuses for their crop due to a drop in prices in the past year.

This is according to the Kenya Tea Development Agency (KTDA), which said farmers were likely to receive between Sh 10 and Sh 18 per kilogramme in bonuses this year, which is a reduction from the 31.65 shillings per kilo they got last year.

Good weather had been termed as a reason for the improved yield.

In the last financial year, global tea production stood at 4.8 billion kilograms while consumption was 4.6 billion kilograms meaning there was a surplus of 200 million kilograms.

According to KTDA, “Tea prices at the Mombasa auction have suffered a 30 percent decrease since July 2013 as a result of increased supply.

Lately, a kilo of made tea is selling at an average price of US$ 2.2 compared to USD 3.27 same period last year.”

The small-scale tea production rose from 900 million kilograms of green leaf in 2011/12 financial year to 1,2 billion kilograms in the last financial year.

This translates to over 60 million kilogrammes of made tea above the previous year's production, a development that culminated in more tea than the market could absorb.

Increased production has spilled over to the current financial year that ends in June, hence the excess tea in the global market is what is causing a drop in tea prices being experienced. - CAJ News

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