Increased tea output pushes exports
Favorable weather conditions in the country in 2020 and rapid expansion of acreage under tea over the years led to increased tea production in Kenya. The Kenya National Bureau of Statistics (2020) states that acreage under tea increased to 163K hectares in 2019 from 141,800 hectares in 2018. This has contributed to the increase in tea volumes on offer in the market. The quantity of tea exported from Kenya in 2020 increased by 21% to 575.3 million kgs, from 474.9 million kgs the previous year. The month of April recorded the highest quantity of tea exports in 2020, at 57.7 million kilograms, along with the highest earnings at KSh 13.2 billion (USD 120.4 million).
Export value of tea from Kenya between January 2020 and October 2020
Source: Kenya Revenue Authority
According to Christine Simon, the country did not halt tea exports in 2020. High tea prices from rival suppliers such as India further propelled Kenya’s success in the export market.
“As for export figures; yes, we didn't lock down the tea industry as other tea-producing countries did, so tea buyers moved to Kenya from India. Indian tea prices skyrocketed and are yet to stabilize. So we were lucky in that sense,” says Simon.
Another contributing factor towards the sharp increase of Kenyan tea exports in 2020 was a dip in tea production from the world’s second-largest black tea producer, India. India’s tea sector suffered from workforce shortages due to the lockdown and heavy rains, which resulted in lower tea output from the Asian nation. Subsequently, major tea importers such as the UK, Egypt, and Pakistan purchased the Kenyan commodity.
Percentage change on tea exports from Kenya in June 2020, by main destinations (compared to June 2019)
Source: Tea Directorate
During 2020, Kenya’s tea export destinations averaged 46, with Pakistan emerging as the leading market. According to the Tea Directorate, other key export markets for Kenya included Egypt, Russia, Britain, United Arab Emirates, Yemen, Kazakhstan, Sudan, Nigeria, and Poland. One of Kenya’s highest sales appeared in December 2020, with exports standing at 34.2 million kgs, up from 32 million kgs in November.
Market Outlook
According to Simon, optimism remains high amongst Kenyan tea farmers and traders that tea exports will remain on an upward trend in 2021. Kenya continues to flood the global black tea markets due to higher production in the country. Kenyan tea production has increased to 500 million kg, 16.2% from 430 million kilograms last year. This high output has reduced Kenyan tea prices globally to USD1.8-2 per kg, which is a lower price than India’s tea prices. The lockdown in the United Kingdom following the outbreak of a new coronavirus strain has also impacted Kenyan tea prices. The UK is one of the largest destinations for Kenyan teas.
The Kenyan Industrialisation, Trade, and Enterprise Development Ministry hope that the recent Trade Agreement with the UK, the existing EU agreement, and the US’s ongoing talks will help secure more markets for Kenyan tea exports. Kenya is also keen on supplying tea to more countries within Africa under the African Continental Free Trade Area, which began on January 1, 2021.
The Kenyan government is also working on eliminating the rampant corruption within the country’s tea industry and creating a structure that allows producers to earn more from their produce.
“The government has recently put structural reforms into place aimed to restore profitability for tea producers,” added Simon.
Sources:
> Tea Directorate. ”Tea Industry Performance Report June 2020.”
> KTDA. “JANUARY 2021 UPDATE: TEA PRICES DIP 13% AS HIGH VOLUMES PERSIST.”
> Kenya National Bureau of Statistics. “Leading Economic Indicators October 2020.”
> Kenyan Wallstreet. “Despite Pandemic, Kenya’s Tea Export Earnings Jump 15% to KSh 130 Billion in 2020.”
> CGTN Africa. “Kenya’s tea earnings surge to 1.09 bln USD in 2020.”
> Economic Times. “Kenya taking over global markets, Indian tea producers look inward for price recovery.”
> The Star. “Kenya's exports grow in Covid period as imports drop.”
