Weak shilling lifts tea earnings by Sh5 billion

Farmers earned Sh5 billion more from the sale of tea in eight months to August on the back of a strong dollar and an increase in unit price, defying a 22 percent decline in export volumes by Kenya’s top buyers of the beverage.
The tea directorate says the earnings from export rose to Sh88 billion in the review period from Sh83 billion a year earlier.
In the review period, the average exchange rate for the dollar was Sh116 in comparison to Sh108.75 previously.
The unit price in the first eight months of the year rose to $2.51 from a low of $1.95 last year, recording a 28 percent growth.
The volumes of tea exported to the global market declined from 389 million kilos in eight months of last year to 303 million kilos in the review period.
According to the directorate, the Russian-Ukraine war has continued to cause recession on major economies, which are key buyers of the Kenyan beverage.
“Decline on exports was majorly due to effect of Russia-Ukraine crisis that continued to cause global economic recession and thus negatively affecting purchasing power in most markets,” said the directorate.
All the three top buyers of the Kenyan beverage recorded a significant decline in purchases owing to economic challenges they face.
The volume of tea exported to Pakistan, Kenya’s top buyer of the commodity, declined by 18 percent in the review period to 121 million kilogrammes with Egypt and Pakistan recording a 28 percent (48 million kilos) and 30 percent ( 23.6 million kilos) drop respectively.
Pakistan buys nearly 40 percent of the total tea exports with the economic turmoil facing the country resulting to low uptake his time round.
In June, Pakistan urged its citizens to cut tea consumption and limited the amount of money that importers can access from the banks to curb expensive imports in the wake of a weakening rupee.
Russia, which until April this year ranked as the fourth top buyer of the beverage, witnessed a 38 percent decline in purchases, moving down the table to position seven in the list of the top buyers.
Kenya has over the years been scouting for new buyers as it seeks to cut reliance on traditional customers and seeking other buyers such Nigeria, Zambia, Estonia, New Zealand, Burkina Faso, Gabon and Senegal.