NAIROBI, Kenya
East Africa’s continuing drought is devastating export crops including tea, adding to the misery of more than 13 million people as production declines reduce essential overseas earnings.
Tea production declined 12 percent in the period January through August, the largest production drop among the major tea exporters. Kenya, the largest exporter of black tea, anticipates an overall 8.5 percent decline through year end. Total output may fall to 365 million kilograms (mkgs) from 399 mkgs last year, according to Sicily Kariuki, managing director of the Tea Board of Kenya.
Kenyan smallholders reported 105.8 mkgs during the first half of the year, down from 124.3 mkgs, and tea production on plantations fell from 88.1 mkgs to 72.6 mkgs in the period ending July.
Coincidental shortages in several producing countries, including Sri Lanka and India lead experts to predict worldwide demand will approximately equal output. Prices remain firm under these conditions. Kenya has recorded a 9.3 percent increase in exports to $106 billion shillings ($1.12 billion). Offsetting these gains are steep increases in fertilizer and rising land costs.
Tea sold at the Mombasa Auction brought an average $2.90 kg this week. The top price for BP1s was $3.40 kg with the best PF1 fannings selling for $3.82 kg, according to Africa Tea Brokers.
"Although the tea sector is enjoying the current favourable foreign exchange in terms of exports, the sector also does import quite some substantial imports which go into the sector ranging from fertilizer, the machinery, packaging and so there is almost a near netting off effect," Kariuki told East African Business Week.
Kenyan exports account for about 22 percent of global demand. Key destinations include Pakistan, the United Kingdom, Sudan, and Afghanistan. In total, these five export destinations account for 72 per cent of Kenya’s tea exports.
Upheaval in the Middle East further disrupted exports early in the year but the market has settled. “Egypt remained the leading export destination for Kenyan tea in August, having imported 22 per cent of Kenyan tea,” Kariuki told The Nation.
Last year Kenya exported 93 mkgs to Egypt and 76 mkgs to Pakistan where the war in Afghanistan presents obstacles. Afghanistan received 49 mkgs of Kenyan tea in 2010.
In the United Kingdom, which imported 73 mkgs of Kenyan tea last year, experts predict a price increase of 7 percent adding 10-cents to the price of 250 g package of loose tea or 80 teabags. Kenya supplies half of England's tea.
Robert Miles, a consumer analyst with the market research firm Mintec, told the London Telegraph, “Global supply is likely to be even more precariously balanced in 2012 and global demand for tea is set to rise across the board next season but additional demand coming from China and India's rapidly growing middle classes.
“Whether they will remain stable in 2012 will depend on the severity of the Kenyan drought,” says Miles.
The IFRC/Kenya Red Cross Society estimates 2.4 to 3.75 million people are in need of assistance. The humanitarian website Relief Web reports “more areas such as the lower Eastern region of Kenya have now slipped from a crisis to an emergency level in terms of food insecurity with a confirmed near total crop failure. In addition, as more resources get depleted, there has been increased migration of nomadic pastoral groups, resulting in resource-based conflict.”
The International Center for Tropical Agriculture has warned that “the current tea growing areas in Kenya will change dramatically” in the decade ahead and that by 2050 tea will no longer be able to survive in many of the country’s tea-growing areas.
The Kenyan Tea Development Agency is working with the German Development Agency and the Ethical Tea Partnership on a three-year program to prepare the sector on how to respond to climate change.
Sources: East African Business Week, The Nation, ReliefWeb.int, London Telegraph