NAIROBI, Jan. 18 (Xinhua) -- Kenya Tea Development Agency (KTDA) said Monday the country's tea prices have declined for the third year in a row due to global supply surplus above the market demand.
Alfred Njagi, KTDA Management Services managing director said the volume of green leaf produced by its smallholder tea farmers dropped slightly by 0.7 percent to 615 million kilograms in the first six months to December 2020 compared to 619.5 million kilograms in the same period in 2019.
Njagi said the decline in the volume of tea produced is in line with the 2018 Food and Agriculture Organization of the United Nations (FAO) market forecast.
"High volumes of tea produced in the east African region and elsewhere on the globe have contributed to the continued price decline in the global market," Njagi said in a statement issued in Nairobi.
During the period under review, the average price per kilo of KTDA teas at the Mombasa Tea Auction dropped significantly by 14 percent to 240 shillings (about 2.18 U.S. dollars) from 2.54 dollars recorded in the same period in 2019.
Despite the slight drop in production, Njagi attributed the drop in tea prices to the high volumes of tea that continue to be delivered to the auction from the region, in addition to the global oversupply of tea. He said the high tea production in Kenya is due to favorable weather conditions during the period, besides the rapid expansion of acreage under tea over the years.
Data from the Kenya National Bureau of Statistics (2020) also shows that smallholder farmers across the country, including those delivering to KTDA managed factories, have been increasing acreage under tea has contributed to the increase in tea volumes on offer in the market.
"The impact on tea prices of the commencement of the Tea Act 2020 that requires all black tea exports processed and manufactured in Kenya to be sold exclusively at the tea auction floor will soon be realized," Njagi, said. "We are waiting to see the full effects of the new law on the industry in the coming months," he added.