Selling a surplus of 15 million kilos of tea is Kenya’s challenge, which sees stocks accumulating. A colossal challenge, because the increase in tea production in the country has come at the expense of quality.
According to the agency’s calculations, tea supplies exceeded seven billion cups in October. Bloomberg. A challenge for the Kenya who must market these plates as quickly as possible because they do not see their quality and with it their value decrease.
For three years, the sale of Kenyan tea slowed down due to minimum price established by the authorities – 2.34 dollars per kilo exported. A price that valorized even the lowest qualities, which therefore found no buyer. In 2023, 40% of the tea offered at Mombasa auctions remained unsold, according to the Tea Board of Kenya. During a sale last July, this percentage of unsold items even rose to 60%.
An overproduction that weighs on prices
Today the price obstacle has been removed: in early October the authorities finally gave in in an attempt to absorb the surplus. This means that qualities whose prices had been artificially inflated will find a more realistic value in the eyes of buyers who had avoided them in recent months.
The set objective is to liquidate the surplus, but the measure will not be synonymous with an increase in prices, on the contrary. The vice president of trade at Universal Commodities Trading, quoted by the Bloomberg agency, estimates that the increase in Kenyan production has already caused a global price drop of between 10 and 30%.
The countries that sell their tea at the Mombasa auction can confirm this. This is the case of Uganda, which in the last two years has sold most of its production at half the price. This led to the closure of at least 10 of the country’s 37 factories.
Better quality Kenyan tea tomorrow?
According to experts, the price increase will only occur through the control of the production of the largest tea exporter in the world, because the growth in volumes is not followed by that of demand, which increases more slowly.
Kenya will also not spare work on the quality of its leaves if it wants to sell its tea better and promote it better outside the industrial groups that are its main customers. A wish expressed by the Kenyan president himself.
Time.news Interview with Dr. Sarah Njuguna, Tea Production Expert
Time.news Editor (TNE): Welcome, Dr. Njuguna. Thank you for joining us to discuss the current challenges facing Kenya’s tea industry, particularly the surplus of 15 million kilos of tea. How critical is this situation for Kenya?
Dr. Sarah Njuguna (SN): Thank you for having me. It is indeed a critical situation. Kenya is one of the largest tea producers globally, and this surplus indicates not just a logistical issue but a deeper problem with quality control and market dynamics. If stocks keep accumulating, it can significantly affect producers, especially smallholder farmers who rely on tea as their main source of income.
TNE: You mentioned the quality issue. Can you elaborate on how the increase in production has led to a decline in quality?
SN: Certainly. Over the past few years, there has been an intense push to boost production to meet global demand. However, this often comes at the expense of quality. Many producers are focused on quantity rather than the processes required to maintain high standards. Consequently, we’re seeing lower-rated teas enter the market, which struggles to find buyers.
TNE: That’s interesting. And with tea supplies exceeding seven billion cups as of October, it seems there’s a lot of competition out there. How does this oversupply affect pricing?
SN: The oversupply puts immense pressure on prices. With the significant surplus, more tea is available than what the market can absorb, leading to lower prices. This makes it even harder for farmers to sell their products, especially when the government has set a minimum export price of $2.34 per kilo. In fact, in 2023, around 40% of the tea offered at Mombasa auctions went unsold, which is alarming.
TNE: Why has this minimum price been established, and why is it becoming a hurdle for sellers?
SN: The minimum price was created to protect farmers and ensure they receive fair compensation for their labor. However, the unintended consequence is that it has caused buyers to look elsewhere for better deals, particularly when the quality of Kenyan tea is perceived to be declining. If buyers can find cheaper and higher-quality options from other countries, it becomes a tough sell for Kenyan producers.
TNE: What strategies do you think the Kenyan tea industry can implement to tackle this surplus and improve quality?
SN: The industry needs a multi-faceted approach. Firstly, improving agricultural practices to enhance the quality of tea should be prioritized. This includes better training for farmers on sustainable practices. Secondly, strengthening marketing strategies to promote premium Kenyan teas can help position them effectively in the global market. Lastly, reevaluating the pricing model to reflect true market conditions—without undermining the farmers—will be essential.
TNE: That sounds like a manageable roadmap. How optimistic are you about the future of Kenyan tea in light of these challenges?
SN: I remain cautiously optimistic. Kenya has a rich heritage in tea production, and there is a growing global appreciation for high-quality teas. If the industry can navigate these challenges by focusing on quality and smart marketing while also being responsive to market demands, I believe there is still a bright future ahead.
TNE: Thank you, Dr. Njuguna. Your insights shed much light on the complexities of the tea market in Kenya. We hope to see some developments that address these challenges soon.
SN: Thank you for having me. It’s always a pleasure to discuss a topic that means so much to our economy and culture.