Relatively low global oil prices and currency devaluation of
countries that are major buyers of the
Kenyan tea have taken a toll on the price of the beverage, now at a five-year low of Sh190.
Kenyan tea have taken a toll on the price of the beverage, now at a five-year low of Sh190.
East
African Tea Traders Association (Etta) says this has had a negative
impact on disposable income of consumers leading to reduced purchasing
power and demand of the commodity.
“Economies
of a number of importing countries are heavily dependent on oil and gas
whose prices have been persistently low. Currency devaluations in a
number of importing countries have had a negative impact on disposable
income for consumer goods,” said Eatta in a statement.
Pakistan
continues to be a major player in the global tea trade but the impact
of currency devaluation in the country is felt in Kenya. The agency says
inflation in Egypt reached highs of 20 percent in 2018 but is projected
to drop to 14 percent in 2019 while the United Kingdom continues to be
unpredictable in the wake of uncertainties associated with Brexit.
Pakistan is the number one buyer of the Kenyan tea followed by Egypt and
UK, which combined buy close to 90 percent of the total production.
Eatta
says other contributing factors in tea prices and returns include the
levying of VAT on direct sales by local exporters, VAT on buyer
inter-trading and lack of adequate consumer-driven research and
development and promotional activities. Global tea production in 2018
increased by 0.68 percent to 5.81 billion with Africa contributing 717
million kilos. Global tea exports were 1.85 billion kilos while Africa’s
contribution was 654 million kilos accounting for 35 percent.
Productivity is predominantly driven by weather and improved husbandry.
Global consumption of tea in 2018 was 5.61 billion kilos compared with
5.48 billion kilos in 2017 an increase of 2.4 percent and a surplus of
241 million kilos.
The Mombasa tea auction is currently the largest black CTC tea
auction centre in the world and accounts for 32 percent of global tea
exports. Tea is one of Kenya’s largest foreign exchange earners,
contributing over Sh114 billion in 2013, Sh101 billion in 2014, Sh124
billion in 2015, Sh120.6 billion in 2016, Sh129 billion in 2017 and
Sh140 billion in 2018.
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