Tea production for the month of May 2022 was enhanced by 4.77 Million Kgs from 45.32 Million Kgs recorded in the same period of 2021 to 50 Million Kgs. Compared to the previous months, production for May was higher than 41.17 Million Kgs recorded in April and 46.32 Million Kgs in March. Higher production was attributed to good weather conditions characterized by warm temperatures and enhanced rainfall. Though the month of May usually marks the cessation of the “long rains” season over most parts of the country except for the Coastal region and Western Kenya, several parts of the country experienced slightly enhanced rainfall, which was above-average during the first half of the month and near-average during the second half of the month.
In tea-growing areas West of the Rift, Kericho experienced partly sunny mornings followed by downpours averaging 108-165mm daily in the first two weeks of the month. In other parts of the West of Rift, average daily precipitation was also high and ranged between 73-92mm in Nandi and 40-62 mm in Bomet, Kisii and Nyamira. Compared to the West of Rift, tea growing areas in the East of Rift recorded slightly lower precipitation averaging between 53-144 mm daily during the first half of the month. Consequently, output in the West of Rift recorded a significant increase of 3.07 Million Kgs from 29.58 Million Kgs registered during the corresponding month of 2021 to 32.65 Million Kgs. Similarly, in the East of Rift, an increase of 1.70 Million Kgs in output was recorded from 15.73 Million Kgs recorded during the corresponding month of 2021 to 17.43 Million Kgs. Due to good coverage of the Smallholder Sub-sector in tea growing areas that recorded favourable weather conditions both in the West and East of Rift, output within the sub-sector rose significantly by 2.91 Million Kgs from 24.88 Million Kgs to 27.79 Million Kgs. Similarly, the Plantation sub-sector recorded higher production of 1.87 Million Kgs from 20.43 Million Kgs recorded during the corresponding month of 2021 to 22.30 Million Kgs.
Despite higher output in the month of May, cumulative production for the first five months of the year was lower by 3.51 Million Kgs to stand at 227.09 Million Kgs against 230.60 Million Kgs recorded during the corresponding period of 2021. Notably, due to unfavourable weather conditions experienced during the first four months of the year, lower production trend to date is likely to continue throughout the rest of the year.
During the month of May, auction sales volume for Kenyan tea stood at 38.85 Million Kgs which was lower compared to 45.84 Million Kgs recorded in the corresponding month of last year. It was also lower in comparison with 40.77 Million Kgs sold in the month of April and 45.29 Million Kgs sold in the month of March.
The average auction price for Kenyan tea during the month of May this year was slightly lower at 2.41 USD per Kg against 2.63 USD in April and 2.59 USD in March. However, it was higher compared to 1.91 USD and 1.98 USD recorded during the same period of 2021 and 2020, respectively. Lower prices compared to the previous months were due to less buying activity as several markets imported fewer quantities owing to the continued effect of the global economic shock caused by the impact of the Russia-Ukraine crisis. As a result of the crisis, most global economies are experiencing commodity shortages, rising fuel prices, scarcity of foreign exchange reserves and depreciation of local currencies leading to soaring inflation and slow economic growth. The crisis which started at the end of February this year came at a time when most economies were on the path to economic recovery after experiencing slow growth due to the effect of the Covid-19 Pandemic in 2020 and 2021.
Despite the global economic shock occasioned by the Russia-Ukraine crisis, the auction prices to date have remained buoyant after experiencing a declining trend to a seven-month low of 1.75 USD per Kg in July 2021. During the month of May 2022, tea offered for sale by the smallholder tea factories fetched an average price of 2.63 USD per Kg for the main grades compared to 2.05 USD in May 2021.
For all the teas offered for sale at the auction during the month, the “Best” category of CTC leaf grades fetched higher prices at between USD 2.60 to 3.72 per Kg for the BPIs and 2.55 to 3.31 for the PFIs while tea prices for a similar category of the dust grades ranged between USD 2.65 to 3.19 for PDust and USD 2.64 to 3.29 for Dustle 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 outlots. There were no Orthodox tea grades on offer at the auction during the month.
The total export volume for the month of May 2022 was lower by 28% from 50.76 Million Kgs recorded in the same period of last year to 36.56 Million Kgs. It was also lower compared to export volumes of 39.56 Million Kgs in April and 44.43 Million Kgs in March. The decline in export volume was majorly due to the effect of the Russia-Ukraine crisis that continued to cause the global economic recession and thus negatively affected purchasing power in most markets.
The recession not only affected the export volume but also resulted in a reduced number of export destinations especially to emerging and new markets. During the month, Kenya tea was shipped to forty (40) export destinations compared to fifty one (51) for the same period of last year. The export markets were also less compared to forty five (45) export destinations in the month of April and forty seven (47) export destinations during the month of March.
Pakistan maintained the leading export destination for Kenyan tea having imported 13.84 Million Kgs compared to 16.22 Million Kgs imported during the previous month. Imports by Pakistan accounted for 38% of the total export volume. Other key export destinations for Kenyan tea were Egypt (5.31 Million Kgs); UAE (3.54 Million Kgs); UK (2.72 Million Kgs); Yemen (1.67 million Kgs); Russia (1.66 Million Kgs); Sudan (1.57 Million Kgs); Poland (0.95 million Kgs); Afghanistan (0.70 million Kgs); and Kazakhstan (0.61 million Kgs). The top ten export destinations, the majority of which are traditional markets for Kenyan tea accounted for 89% of Kenya’s tea export volume. Apart from UAE, Sudan, Poland and Afghanistan, most of the other traditional markets recorded lower tea imports from Kenya compared to the same period of last year. The decline was also recorded in key emerging markets such as Nigeria, Jordan, China and Netherlands.
Despite the market access challenges occasioned by the Russia-Ukraine crisis, there was a gradual increase in exports to Russia from 1.61 Million Kgs recorded in April and 0.686 Million Kgs in March to 1.66 Million Kgs. However, export volume was lower compared to 2.55 million Kgs shipped during the corresponding month of last year. Notably, a few shipments were recorded in seasonal markets such as Nicaragua, Mali, Mexico, Singapore, Australia and Tanzania.
LOCAL TEA SALES
Local tea sales for May 2022 stood at 2.41 Million Kgs against 4.15 Million Kgs for the corresponding period of 2021 while cumulative tea sales for the five months period up to May 2022 were 12.45 Million Kgs against 15.44 Million Kgs for the same period of 2021. Lower sales during the month and the year to date were attributed to lower demand due to the continued effect of inflationary pressure on basic commodity prices occasioned by the global economic recession, weakening of the Kenya Shilling against the USD and increase in fuel prices. Overall inflation increased to 7.1 per cent in May compared to 6.5 per cent in April 2022, 5.6 per cent in March and 5.1 per cent in February.