Kenya's 2011 tea earnings hit record $1.3bn

Kenya's weak shilling lifted tea export earnings to reach $1.27 billion in 2011, up from $1.13 billion in 2010, a government official said on Wednesday.

An Assistant Minister in the Ministry of Agriculture Gideon Ndambuki told journalists in Nairobi the tea sector recorded a 12 per cent increase in earnings despite lower export volume due to a depreciated shilling and strong price of tea.

"The export earnings for 2011 which stood at $1.27 billion dollars were the highest the industry has ever recorded, due to weakening of the shilling against the dollar coupled with improve prices," Mr Ndambuki said.

"During the year 2011, Kenya's tea export volume reached 421 million kilogrammes which was slightly lower compared to 441 million kilogrammes recorded in 2010," he added.

The minister said that the average exchange rate was 88.6 local units to the dollar in 2011 compared to 79.2 to the dollar recorded in the previous year.

"Due to Kenya's good quality of tea, only a few countries including Sri Lanka recorded better auction prices than Kenya," he said.

"The cumulative local tea consumption stood at 20 million kilogrammes valued at $128 million, up 7 per cent from 2010, where 18.7 million kilogrammes of the beverage worth $119 million was sold locally," Mr Ndambuki said.

He said that over the past five years local consumption has been growing at an average rate of 3 per cent annually.

Leading markets
Agriculture Permanent Secretary (PS) Dr Romano Koome said the country's five traditional export markets accounted for 70 per cent of total exports, while the other 49 markets accounted for remaining 30 per cent volume.

"Pakistan was the leading export destination having imported 80. 8 million kilogrammes or 19 per cent of all the volume," Dr Koome said.

The other key markets were Egypt, which imported 79.9 million kilogrammes, Britain accounted for 68.3 million kilogrammes, Afghanistan 44.4 million kilogrammes and Sudan 26.1 million kilogrammes.

Dr Kiome said that among the key markets, Pakistan recorded a growth of 6 per cent in volume compared to 2010 due to a continued reduction in incidences of commodity smuggling from neighbouring Afghanistan.

"Exports to Egypt, which was the largest market for Kenyan tea in 2010, declined by 14 per cent largely due to political unrest within the Arab country at the beginning of last year," he added.

"Tea volumes destined to Britain declined by 6 per cent, while Afghanistan and Sudan also reduced volumes by 10 and 16 per cent respectively. The lower export volumes to Sudan was attributed to a shortage of foreign exchange in the country due to reduction in revenue after the country lost 75 per cent of its oil reserves to South Sudan following the secession in 2011," he added.
Dr Koome said that deliberate efforts to develop emerging markets are paying off, as these new markets experienced the largest increase in volumes in 2011.

Compared to 2010, export volumes to Russia, China, Iran rose by 11 per cent, 40 per cent and 70 per cent respectively in 2011. The PS said that there has been a global trend of declining consumption of tea except in countries that have large population such as China and India.

Old habit

"In Europe and North America tea is considered an old style habit and so the youth in these nations are going for other beverage options such as juices and soft drinks," he said.

"We hope to tap the huge youth market in foreign counties by introducing attractive and innovative types of tea in order to boost our export volumes even further," Dr Koome said.

Tea Board of Kenya MD Sicily Kariuki said that the tea sector surmounted the production challenges occasioned by hot and dry conditions in the beginning of 2011 and frostbite towards the end of the year to post record earnings.

"The Tea Board of Kenya estimates around $10.4 million worth of tea has been affected by the frostbite already," she said. "Already 2 per cent of all areas under tea have been affected by the frostbite," she said.

Ms Kariuki said that the country's production for the first quarter of 2012 will be impacted negatively by the dry weather spell and the frostbite that has affected parts of the tea growing areas.

"We are projecting that production for the first quarter of 2012 will likely drop by 17 per cent from 85 million kilogrammes recorded during the same period in 2011 to about 70 million kilogrammes," she added.

"Consequently, this is likely to affect production for the year marginally by 2 per cent from the 377 million kilogrammes recorded in 2011 to 369 million kilogrammes," the managing director said.
However, Ms Kariuki said that due to expected firm prices at the auction, Kenya's tea export earnings for the year 2012 should reach  $1.34 billion dollars thereby surpassing the 2011 record. (Xinhua)