Kenya is one of the world’s biggest tea exporters. In fact, hundreds of thousands of tea farmers have earned a living for generations in this east African country.
But the industry is screeching to a halt. This year, farmers sold 40% less than the three previous years because they have started to switch to alternative crops. You see, good weather and big harvests have led to a glut of Kenya’s specialty black tea market.
Tea farmers are so discouraged by the drop in sales that they are switching to crops in higher demand. Some are even considering building on their plots.
Tea farmer Augustine Bushenei adds, “This tea crop has become useless because the price has gone down, while fertilizer and pesticide prices have shot up. We may pull it all up and keep cattle. We have kids in school, we rely on tea for our food and clothes.”
The pressure is definitely on.
Not Enough Cups
Compared to a decade ago, Kenya now produces 50% more tea – boasting $1.3 billion from the crop last year.
It’s true that the tea crop is one of the country’s biggest earners, but, thanks to more competition, tea prices have been under pressure.
Farmers in Kenya are crying out for government help, looking for them to cushion price swings and possibly find new export markets.
“The doom and gloom is justified. I don’t see a big bounce happening anytime soon – and you know… I think until we reduce supply, in effect we are pricing our tea too low. We have to reduce our supply in order to get higher prices,” says Aly Khan Satchu, an economic analyst.
What’s more, 70% of Kenya’s tea leaves go to only five countries. And due to political turmoil in four of them – Egypt, Sudan, Afghanistan, and Pakistan – purchasing numbers are taking a hit.
Meanwhile, consumption in Britain (ironically) has reached a plateau. It appears that the Brits are turning a new leaf, as coffee is on the verge of being its No. 1 drink.
And “the chase” continues,
Commodities Research Team