Kenya’s Tea Export Value Rises due to Higher Global Prices

Bulk Black Tea

Kenya

Market & Price Trends

Published Jul 6, 2022

Kenyan black tea is very popular in the global market, with the country being among the leading producers of the variety. This year, the production will be on the lower end due to unsuitable agro-climatic conditions for growing tea. In Q1 of 2022, tea production recorded a YoY decrease of 9%. Correspondingly, the volume of exports also recorded a YoY fall of 12% during that period, but the value of tea exports managed to record a YoY increase of over 10%. The higher export value was driven by rising global tea prices. The outlook for the Kenyan tea industry remains uncertain as the country simultaneously looks to expand its market to large countries like China but has limited production capacity this year.

According to the data of the Tea Board of Kenya, the weather conditions in Kenya are not suitable for growing and cultivating tea. This is especially true in the Rift Valley's East, particularly in Kirinyaga, Embu, and Meru counties, where tea production has dropped dramatically. In Q1 2022, tea production recorded a YoY decline of about 9% in comparison to the same period in 2021. Production fell from 135.83 million kgs in Q1 2021 to 145.98 million kgs in 2022 due to erratic rainfall patterns. The rainfall received in most parts of the country was occasional and depressed, which is not an ideal environment for cultivating tea. It is anticipated that the lower production trend is likely to continue throughout the rest of the year in Kenya. This might pose a problem for tea exporters as the demand and price of tea in the global market remains high while the country is focused on expanding its export volumes and value.

According to the Tea Directorate of Kenya, despite low production, Kenya's earnings from tea exports rose 10.4% YoY in Q1 2022. The major destinations of tea exports remained the same, with Kenyan tea headed to Pakistan, Egypt, the United Kingdom, the United Arab Emirates, and Russia. The country exported tea worth USD 339 million during this period by exporting over 135 thousand mt of tea. Even though the value of tea exports increased, the volume of exports was 12% less than the 152 million mt exported in Q1 2021. The increase in export value was a consequence of high global tea prices in the market during Q1 2022. The average price recorded in 2022 during this period was about USD 3, which is 10% more than the USD 2.7 recorded during the same period in 2021.

The outlook for Kenyan tea exports remains uncertain as the country is likely to record low production volumes. This may become a serious cause of concern as government officials are working on building Kenya-China bilateral relations by increasing Kenya’s black tea exports to China. According to a recent post by the Kenyan Wall Street, exporters are seeking to capture China’s interest in black tea as the demand for tea in the Asian country continues to boom. Apart from tea, there are also efforts being made to promote the export of coffee, avocados and other horticultural products to China. Given Kenya’s interest in expanding its tea exports, the country must focus on improving its tea production through optimising the Kenyan tea value chain.