Kenya tea industry performance highlights for the year 2022 and December 2022

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Total tea production for the year 2022 in Kenya was lower by 2.79 Million Kgs to stand at 535.04 Million Kgs against 537.83 Million Kgs recorded in 2021. According to the Tea Board of Kenya, lower production for the year 2022 was attributed to depressed (below average) and poorly distributed rainfall in the months of March and April during the “long Rains” and in November during the “Short Rains” season. Though the months of April and November usually mark the peak of the “long Rains” and Short Rains” season, respectively, the rainfall received in most parts of the country was occasional, depressed and unevenly distributed while in other areas, weather conditions were mostly sunny and dry. The rainfall amounts received was also below the Long-term Mean for the respective months owing to the effects of “La nina” weather conditions.

During the year 2022, the total volume of Kenya tea sold at the auction was higher at 410.26 Million Kgs compared to 388.28 Million Kgs in 2021 but lower against 415.98 Million Kgs in 2020. However, auction prices for Kenya tea were higher at an average of USD 2.49 per Kg compared to USD 2.10 for the year 2021 and 2.01 in 2020.

Tea File Photo min

PRODUCTION

Tea production for the month of December 2022 was enhanced by 2.79 Million Kgs from 52.52 billion Kgs recorded in the same month of 2021 to 55.32 Million Kgs. Production for the month of December was also higher compared to that of November which recorded 49.40 Million Kgs. Improved production for the month of December follows enhanced rainfall in most parts of the country compared to the months of November 2022 and December 2021.

Though the month of December usually marks the cessation of the October to December seasonal rainfall (“Short Rains” Season), rainfall amounts received in the western region of the country and the highlands West, Central and South of the Rift Valley was more enhanced to above average except in a few areas such as Nakuru, Bomet and Nyamira that recorded below average precipitation. In tea growing areas within the West of Rift valley, the highest monthly rainfall was recorded in Kericho, Kakamega and Kisii. Similarly, the highlands East of the Rift Valley and Central Kenya received near-to-above average rainfall, with Meru recording the highest amounts. Consequently, production in tea growing areas within the East of Rift was significantly higher at 21.91 I MiIIion Kgs compared to 19.53 Million Kgs recorded during the corresponding month of 2021. Within the West of Rift region, production increased slightly from 32.99 Million Kgs to 33.40 Million Kgs recorded during the month of December 2021. Consequent to good weather conditions in parts of the West of Rift (Kericho) and East of Rift (Kiambu) where the Plantation sub-sector is more pronounced, production within the sub-sector increased from 22.35 Million Kgs to 25.24 Million Kgs. However, owing to poorly distributed rainfall in some parts of the West of Rift (Bomet and Nyamira)  production within the smallholder sub-sector dropped from 30.17 Million Kgs recorded during the corresponding month of 2021 to 30.08 Million Kgs.

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Tea picking

TEA SALES

AUCTION

During the month of December, auction sales volume for Kenya tea was lower at 25.30 Million Kgs compared to 40.09 Million Kgs sold in November 2022 and 34.25 Million Kgs in December 2021. The average auction price for Kenya tea during the month of December was slightly lower at 2.39 USD per Kg compared to 2.49 in November and 2.46 USD per Kg in October. It was also lower compared to 2.59 USD recorded during the same period of 2021 but higher than 1.94 USD in December 2020. For all the teas offered for sale at the auction during the month, “Best” category across CTC leaf and dust grades fetched higher prices especially those that were well sorted grades and had brighter liquors.

In 2022, tea offered for sale by the smallholder tea factories fetched significantly higher prices at an average of USD 2.72 per Kg for the main grades from an average price of USD 2.45 in 2021 and USD 2.23 in 2020.

Though the auction prices have been on an upward trajectory since August 2021 after experiencing a declining trend from 2019, during the period from March to December 2022 the prices were negatively affected by global economic shock experienced in most markets due to the effect of Russia-Ukraine crisis. The crisis, which commenced towards the end of February 2022 affected global trading logistics leading to gradual increase in commodity prices and weakening of local currencies against the USD which in turn affected consumer purchasing power within the markets. Notably, during the period to-date, exporters of tea to Russia and Iran markets participated less in tea buying at the auction. Buyers exporting to key markets such as Pakistan and Egypt also bought less due to challenge of payments in the markets attributed to inadequate forex exchange reserves. Consequently, during the period from March to December 2022, auction prices for Kenya tea dropped to an average of between USD 2.36 and USD 2.59 compared to USD 2.71 recorded in January to February.

A worker at Gitugi Tea Factory.
A worker at Gitugi Tea Factory.

EXPORTS

The total export volume for the month of December 2022 was lower by 25% from 45.93 PliIIion Kgs recorded in 2021 to 34.32 Million Kgs and was also lower compared to 40.65 NliIIion Kg recorded in November. However, the number of export destinations was higher at forty-seven compared to forty recorded in December 2021. Lower export volume was due to less imports by Pakistan, Egypt and Russia owing to challenges of forex exchange reserves affecting these markets occasioned by the effect of the Russia-Ukraine crisis on the global economy.

During the month, Pakistan maintained its position as the leading export destination for Kenya tea having imported 12.40 Million Kgs, which was lower compared to 18.64 Million Kgs imported in December 2021 and against 17.67 Million Kgs for the month of November. Imports by Egypt, which is the second biggest market destination for Kenya tea were also lower at 5.98 Million Kgs compared to 9.25 Million Kgs for the same period of 2021. Other key export destinations for Kenya tea were UAE which imported 3.35 billion Kgs; UK (2.94 Million Kgs); Yemen (1.77 Million Kgs); Sudan (1.46 billion Kgs); Afghanistan (0.736 Million Kgs); Kazakhstan (0.665 billion Kgs); Iran (0.598 Million Kgs and Saudi Arabia (0.42 Million Kgs). The top ten export destinations, which are traditional markets for Kenya tea accounted for 88% of Kenya tea export volume out of which 36% was imported by Pakistan.

Amongst the ten traditional markets UAE, Yemen, Afghanistan, Iran and Saudi Arabia recorded higher imports while Pakistan; Egypt; UK; Sudan and Kazakhstan recorded lower tea imports from Kenya compared to the same period of 2021. Decline was also recorded in other key and emerging markets such as Russia; Poland; Jordan; India; NlaIaysia; Sri Lanka; China; Ghana; Turkey; Singapore; and Indonesia. The decline in exports was attributed to the global economic recession that has continued to affect purchasing power in most of the markets.

However, higher shipments were recorded in seasonal and emerging markets such as Burkina Faso; Spain; Brazil; Chile; Zambia; Azerbaijan; Mauritius; Iraq; New Zealand; Gabon; and Mali.

Cumulatively for the year 2022, the total export volume was lower by 19% from 558.92 Million Kgs recorded in 2021 to 450.33 billion Kgs while the export earnings rose to Kshs. 138 Billion compared to 136 Billion in 2021 and 120 Billion in 2020. Increase in export earnings was attributed to depreciation of the Kenya Shilling against the USD as well as improved prices.

During the year 2022, the Kenya  Shilling depreciated gradually against USD from an average of 109.64 in 2021 to 117.87 while the export value per Kg increased from an average of USD 2.23 per Kg. to USD 2.60. Out of the total export volume, 98% was black CTC type of tea while 1% was Orthodox (4.81 billion Kgs) and the remaining 1% consisted of Green, Purple and tea extracts. About 1% (6.35 Million Kgs) was in value added form while 99% was in bulk form. Orthodox, Green, Purple and tea extracts, which are specialty teas were offered to buyers overseas and fetched significantly higher prices compared to CTC teas.

Tea Farm

LOCAL TEA SALES

Local tea sales for December 2022 stood at 3.73 Million Kgs, which was lower against3.87 Million Kgs for the corresponding period of 2021 while cumulative sales in the local market for the year 2022 was also lower at 36.35 Million Kgs against 38.42 Million Kgs for the year 2021 and 40.34 Million Kgs for 2020. Less sales during the year was attributed to lower demand of tea due to reduced purchasing power amongst the consumers occasioned by inflationary pressure on commodity prices. The high rate of inflation was brought about by effect of the ongoing global economic recession. Overall inflation rate for the year 2022 was higher at an   average   of 7.64 percent compared to 6.11 percent for 2021 and 5.29 percent in 2020. The highest rate of inflation averaging 9.04 percent was recorded during the second-half of the year.

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