Production
Tea production for the month of March 2022 was lower by 2.37 Million Kgs from 48.69 Million Kgs recorded in the same period of 2021 to 46.32 Million Kgs. However,
production was higher than recorded during February and January, respectively, owing to the onset of the “long rains” (March-April-May) season in the country during the third and fourth week of March.
Lower production for the month of March compared to the same period of last year was attributed to the fact that rainfall received in most parts of the country was occasional and depressed while in other areas, weather conditions were mostly sunny and dry.
Statistics from the Tea Board of Kenya show that in tea growing areas, adverse weather conditions were more prevalent within the East of Rift, especially within Kirinyaga, Embu and Meru counties consequent to which there was a drop of 3.09 Million Kgs in output from 18.09 Million Kgs recorded during the corresponding month of 2021 to 14.99 Million Kgs. However, production in the West of Rift was marginally higher by 0.72 Million Kgs from 30.62 Million Kgs recorded during
the corresponding month of 2021 to 31.32 Million Kgs. This was attributed to moderate precipitation received across tea-growing areas in the West of Rift despite the effect of hailstorms recorded in some parts of the region, especially within Kericho.
Due to wider coverage of the Smallholder Sub-sector in the East of Rift, the output
dropped by 1.96 Million Kgs from 27.18 Million Kgs to 25.22 Million Kgs. Similarly, the
combined effect of adverse weather conditions in the East of Rift and hailstorms in the West of Rift resulted in lower production of 0.41 Million Kgs within the Plantation sub-sector from 21.50 Million Kgs recorded during the corresponding month of 2021 to 21.09 Million Kgs.
Cumulative production for the first quarter of the year was lower by 5.15 Million Kgs to stand at 135.83 Million Kgs against 140.98 Million Kgs recorded during the corresponding period of 2021. Notably, due to depressed rainfall during the first quarter of the year, the lower production trend to date is likely to continue throughout the rest of the year.
AUCTION
During the month of March, auction sales volume for Kenyan tea stood at 45.29 Million Kgs, which was higher, compared to 36.40 Million Kgs recorded in the month of February and 45.04 Million Kgs sold in the corresponding month of last year. The
average monthly auction price for Kenyan tea dropped to 2.59 USD per Kg against
2.73 USD was recorded in February and 2.68 in January. Lower prices compared to the first two months of the year were attributed to the effect of the global economic crisis caused by the impact of the Russia-Ukraine crisis, which affected commodity logistics in Europe and also a global upsurge in prices of oil and gas thus triggering inflationary pressure and shocks in stock and financial markets.
Notably, Russia is the fifth biggest importer of Kenya tea and is thus a key market for
Kenya. It also plays a significant role in the global economy, as is it the biggest
exporter of oil and natural gas (especially to Europe) and one of the biggest exporters
of wheat, fertilizer and metal. Following Russia’s invasion of Ukraine on 24th February 2022, the Western World imposed economic sanctions against Russia and thus disrupting shipments of commodities exported and imported by Russia. Owing to these disruptions, shipments of tea to Russia were affected while logistics of tea exports to other European markets were held back due to increased congestion in the respective ports of entry attributed to diversion of Cargo destined for Russia. Consequently, tea buyers to Russia and the CIS countries were not very active in auction trading.
Notwithstanding the temporary market shock experienced in March, auction prices for the month of March were however much better against 2.00 USD recorded for the same period of 2021 and 1.99 USD for the same period of 2020. Prior to the impact of the Russia-Ukraine crisis in March, the auction prices have been on an upward trajectory after experiencing a declining trend to a seven-month low of 1.75 USD per Kg in July 2021.
The reversed trend follows the setting up of a minimum reserve price of 2.43 USD per Kg in July for the smallholder sub-sector taking into account the cost of production, the grade of the tea and a reasonable return to the tea farmer. During the month of March 2022, tea offered for sale by the smallholder tea factories fetched an average price of 2.65 USD per Kg for the main grades from an average price of 2.17 USD in March 2021.
TEA INDUSTRY PERFORMANCE REPORT MARCH 2022
For all the tea offered for sale at the auction during the month, “Best” category of CTC leaf grades fetched higher prices at between USD 2.62 to 4.28 per Kg for the BP1s and 2.70 to 3.52 for the PFis while tea prices for a similar category of the dust grades ranged between USD 2.77 to 3.40 for PDust and USD 2.72 to 3.59 for Dust1. Notably, well sorted grades and those with brighter liquors attracted more competitive bids and considerably higher prices while plainer categories across the grades attracted either less interest and thus lower prices or no bid by the buyers and consequently constituted the highest proportion of teas on offer at the auction that were withdrawn.
However, there was no Orthodox tea grades on offer at the auction during the month.
EXPORTS
The total export volume for the month of March 2022 was lower by 26% from 59.77
Million Kgs recorded in the same period of last year to 44.43 Million Kgs. It was also
lower compared to 45.94 Million Kgs in January, and 45.12 Million Kgs, in February.
The decline in export volume was majorly due to the effect of Russia-Ukraine crisis
that caused global economic recession and thus negatively affecting the commodity
markets.
During the month, Kenya tea was shipped to forty seven (47) export destinations
compared to fifty (50) for the same period of last year. Pakistan maintained the
leading export destination for Kenyan tea having imported 16.21 Million Kgs,
accounting for 36% of the total export volume. Other key export destinations for
Kenyan tea were Egypt (10.26 Million Kgs); UK (3.26 Million Kgs); Sudan (2.91 Million
Kgs); UAE (2.10 Million Kgs); Yemen (1.58 million Kgs); Kazakhstan (0.73 million
Kgs); Poland (0.72 million Kgs); Afghanistan (0.70 million Kgs); and Nigeria (0.70
Million Kgs). The top ten export destinations, majority of which are traditional markets for Kenyan tea accounted for 88% of Kenya tea export volume.
During the month, there was a significant drop in exports to Russian and the CIS
markets, respectively due to challenges of market access occasioned by the Russia-
Ukraine crisis. There was also a decline in exports to all traditional markets apart from Sudan and Poland. Decline was also recorded in emerging markets such as
Switzerland, China and Iran. However, there were a few shipments to seasonal
markets such as Djibouti, Kyrgyzstan, Burkina Faso and Chile.
Local tea sales for March 2022 stood at 2.97 Million Kgs against 2.57 Million Kgs for the corresponding period of 2021 while cumulative tea sales for the three months period up to March 2022 were 7.60 Million Kgs against 8.48 Million Kgs for the same period of 2021.
