Sri Lanka Crisis Lifts Tea Farmers Earnings in Mt Kenya
The production crisis of orthodox tea in Sri Lanka has boosted earnings for farmers in Central Kenya who are expected to earn good returns in the 2021/2022 period.
Imenti and Michimikuru, which are among the 11 factories that process orthodox teas will pay their farmers Ksh52 and Ksh48 per kilo respectively in the financial year that ended in June for the second payment, popularly referred to as bonus.
The disruption in Sri Lankan production has resulted in a significant increase in orthodox tea prices with the average cost per kilo hitting a high of Ksh700 from Ksh400 previously.
Sri Lanka is world’s largest exporter of orthodox tea, accounting for more than half of total production. However, government restrictions on the use of fertilisers, pesticides and herbicides have had a negative effect on yields.
Kenya is now filling the void left by Sri Lanka with the high demand for the beverage pushing up the price significantly.
Orthodox teas fetch a lot of money in the world market but production of this variety in Kenya has remained low.
Last year, KTDA requested a Sh800 million grant from the government to expand its production lines for high-value specialty tea following a surge in demand in the international market.
The agency said it had received six-month upfront orders from international buyers as the popularity of the specialty tea continues to grow globally.
KTDA says they want to put up specialty tea production lines in 10 more factories to cater to the expanded order book.
Orthodox teas are whole-leaf teas processed with special machines using a delicate method of gradual rolling and drying of the leaf into smaller sizes of different twists and styles.
A high exchange rate and elevated price of orthodox tea will spare farmers a low bonus this year despite a decline in volumes and lower cost for black CTC tea.
Green leaf delivered to KTDA managed factories dropped by 8.5 percent in the year to June, occasioned by prolonged drought.
Tea prices at the auction also recorded a three percent decline with the average cost for all KTDA-managed factories standing at $2.69 compared to $2.76 a year earlier.
The agency recorded 1.1 billion kilos of tea in the review period down from 1.3 billion realised in the corresponding period a year earlier.
Factory directors from the 71 KTDA-managed factories will this month commence meetings to review and approve the factories annual accounts for the 2022-23 financial year, ahead of the declaration of the second and final payment to farmers in October.