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Turmoil in tea markets signals more price fall

Monday July 01 2019
kimanga

East Africa Tea Traders Association chair Peter Kimanga. PHOTO | KEVIN ODIT

The price of Kenyan tea could dip further from the current year-to-date lows following the economic and political turmoil in the top export markets, which has seen the demand for beverage decline.

Pakistan, a major buyer of the Kenyan tea, has seen its currency plunge by more than 20 percent in the last one year against the dollar with inflation rising to nine percent, impacting negatively on purchasing power, according to Pakistan’s National Economic Council.

The council also estimates that the economy will slow down to 2.4 percent and inflation to rise to 13 percent.

They are not expecting growth to recover over the next two years.

“Pakistan remains our number one buyer of tea but overreliance on the market is taking a toll on our produce,” said Peter Kimanga, East Africa Tea Traders Association chairperson.

Exports to Sudan and Iran have also slowed down following the recent political shocks in the two key buyers of Kenyan tea.

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Sanctions the US imposed on Iran and the political turmoil in Sudan following the ousting of the long-serving President Omar El Bashir have affected tea exports to these countries.

Kenya has been targeting Iran as a major buyers and has been promoting sales in Tehran.

According to the regulator, Iran has a larger population of more than 80 million people with a per capita consumption of 1.4 kilogrammes against Kenya’s half a kilogramme, creating a huge potential market for the country’s produce.

Tea exporters to Khartoum are still facing a shortage of dollars after the coup as traders grapple with delayed payments.

Tea exports to Pakistan declined by 37 percent in the first quarter of this year compared with the previous period.

A market report by the Tea Directorate indicates that the volumes of tea exported to Pakistan dropped from Sh15 billion in the first three months of last year to Sh10 billion under the review period.

According to the regulator, Pakistan purchased 49.3 million kilogrammes of the commodity in the first quarter representing 33 percent of the volume exported. This was a decline from the previous 54 million kilogrammes.

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