Weather boosts Kenya tea output to record in 2010

Reuters, Monday 24 Jan 2011

Earnings grew thanks to rain, stable exchange rates and increased demands in China, India and UAE

Favourable weather and currencies boosted Kenya's 2010 tea crop and export earnings to record levels, and the sector overtook horticulture as the country's top hard currency earner, officials said on Monday.

The Tea Board of Kenya said output leapt 27 per cent to a record 399m kgs and export earnings grew by 40 per cent to 97bn shillings ($1.2bn), surging past horticulture which brought in 78bn.

Kenya is the world's leading exporter of black tea. In 2009, it produced 314m kgs that earned 69bn shillings.

"The drivers of growth for 2010 were purely good weather and a stable foreign exchange rate," Sicily Kariuki, managing director at the Tea Board of Kenya, told a news conference.

"This brings the tea industry as the leading export earner in this country."

The average price for tea sold at the Mombasa auction rose slightly to $2.75 per kg in 2010 from $2.72 in 2009.

Kariuki said production would probably fall to 360 million kgs in 2011 due to unreliable rainfall. Dry weather may cut the first quarter's output by 23 per cent to 85 million kgs.

Good rains for most of 2010 spurred agricultural output in east Africa's largest economy. Horticulture also had a rosy 2010, with export earnings rising from 71.6 billion the previous year, despite disruptions in European markets.

The tea board said exports to emerging Asian economies boosted Kenya's tea earnings.

"The growing economies of India and China have seen the middle-class increase tea consumption," Kariuki said.

Exports to China jumped 65 per cent to 1.5m kgs and those to India grew 46 per cent to 5.4m kgs in 2010 compared with 2009, the board said.

United Arab Emirates emerged as one of the fastest growing destinations for Kenyan tea in 2010 with a 73 per cent jump to 22.2m kgs thanks to the incentives it offers.

Dubai offers enticements such as 60 days of free warehousing, an efficient port and good infrastructure, which has made it an attractive blending and redistribution location.

Kariuki told Reuters that tea-plucking machines, which have caused an uproar from unions, were a necessary evil in light of the high cost of production.

Labour accounts for 45-60 per cent of total production costs. About 3 million people, including small-scale farmers, are employed by the industry, she said.

There was evidence the machines did not have a major impact on the quality of tea as feared but that the topography of some growing areas would not allow their use, Kariuki said.

"With the rising cost of production, mechanisation is the devil we must contend with," she said.

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