Tuesday, February 5, 2013

Kenya diversifies tea markets to boost exports

By MWANIKI WAHOME jwahome@ke.nationmedia.com

Kenya is diversifying its tea markets, with figures from the regulator pointing to emerging outlets last year.

According to the Tea Board of Kenya, while exports increased in two of the top traditional tea markets — Pakistan and Egypt — sales to the United Kingdom declined on account of change of preference, particularly among the youth.

Exports to Pakistan last year rose by 12 per cent to 90.3 million kilogrammes compared to 80.8 million kilogrammes in 2011, earning the country Sh24.5 billion compared to Sh21.8 billion the previous year. Egypt registered 88.8 million kilogrammes worth Sh22.8 billion compared to the previous year’s 79.9 million kilogrammes worth Sh20.6 billion.

Experts in the sector have been championing for market diversification to cushion the industry from possible shocks due to market concentration that has traditionally revolved around the top three countries.

The emerging markets are mostly in Asia, Europe, and Africa. Although their quantities remain lower than the traditional outlets, the percentage growth is encouraging.

“We have seen increased exports to newly-emerging markets due to shifting preferences from orthodox to CTC black tea bag market segment and enhanced promotion,” said the Tea Board of Kenya managing director, Ms Sicily Kariuki.

Kenya is known for its curl, tear, and cut or CTC black tea in the international market.

Black tea consumption is expected to grow at the rate of 1.8 per cent every year, which is almost equal to its production. Projections indicate demand for black tea will be at par with supply by 2021 if no over-reaction to current firm prices is experienced.

Kenya is projecting to earn Sh4 billion more, to bring total export earnings to Sh116 billion this year.

Among the countries that registered significant growth include Russia, with 20.5 million bags compared to 17.4 million bags in 2011, representing a 18 per cent growth.

Somalia recorded 37 per cent growth with 5.1 million kilogrammes, compared to 3.7 million recorded in 2011. Tea exports to Turkey increased by 135 per cent to 2.1 million kilogrammes last year from 897,449 kilogrammes in 2011.

Exports to Indonesia recorded 28 per cent growth to 2.3 million last year from 1.8 million in 2011.

Canada registered growth of 18 per cent to 1.9 million bags last year from 1.6 million bags.

Exports to Netherlands scored an impressive 61 per cent jump to 1.9 million bags last year from 1.2 million bags. Oman imports were 22 per cent higher last year than in 2011, South Africa posted 45 per cent increase while Chile registered 114 per cent growth in tea exports from Kenya.

Switzerland registered 35 per cent growth, New Zealand 187 per cent, Israel 194 per cent, Brazil 306 per cent, Malaysia 44 per cent, and Tanzania 85 per cent. Exports to India, China, Sri Lanka, Germany, Belgium, Greece, and Italy, however, dropped last year.

The Kenya Tea Development Agency managing director, Mr Lerionka Tiampati, said the industry faced major challenges relating to high cost of production, unpredictable exchange rates, decreasing farm sizes, and adverse weather.

“We are investing in the manufacture of orthodox teas to complement revenues from the high quality black CTC teas that KTDA is renowned for worldwide, as well as in financial services,” he said when he announced payment to farmers last year.

He said the cost of operation rose by 15 per cent to Sh77.71 per kilogramme of made tea from Sh67.47 recorded in the previous year.

Mr Tiampati said the agency had embarked on a number of initiatives aimed at reducing energy costs, such as development of small hydro power stations, to diversify revenue streams and earn farmers more.