2016 Tea output expected to rise 15% to 450M Kg on heavy rains -KTDA

Focus On Agricultural Stocks

Kenya expects production of tea to jump from 10% to 15% this year to 450 million kg from 430 million on the back of heavy rains associated with the el Nino weather phenomenon, the agriculture industry regulator said on Tuesday.

Kenya is the world’s No. 1 exporter of black tea and the crop is its top foreign exchange earner. It earned 125.25 billion shillings ($1.24 billion) from tea exports last year.

“We are looking at production increasing over last year to the tune of just 10 to 15 percent … We may go back to 430 million to 450 million kg production,” Alfred Busolo, the acting director general of the Agricultural, Fisheries and Food Authority (AFFA)

Related; Williamson Tea Insights and FY 16 Estimates

Output rose by close to a third in the first quarter of this year, Busolo told Reuters without giving a specific number, attributing the surge to heavy rains that pounded the country, a departure from the usual sunny spells at the start of the year.

The increased production has already hit the average price of tea at the weekly auction in the port of Mombasa.

“Prices have come down from the region of $3 (per kg) to close to $2. That is quite a huge drop,” said Lerionka Tiampati, the managing director of KTDA, which represents small farmers and accounts for 60 percent of Kenya’s production.

Busolo said the projected higher output would help to offset the impact of lower prices and help deal with any exchange rate movements that could curb earnings.

“We are looking forward to increasing volumes offered at the auction so there is a compensating effect and I would say we may do better than last year, marginally, or equal to last year,” he said.

“We may just be around the 125 billion shillings like we did last year.”