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Lower World Coffee, Tea Prices Drag Kenya’s Forex Earnings Down

Lower World Coffee, Tea Prices Drag Kenya’s Forex Earnings Down

 

From The EastAfrican

Kenya is facing a sharp drop in export earnings due to falling coffee and tea prices and volatility in the horticulture market following a slump in global demand.

New industry and Kenya National Bureau of Statistics (KNBS) data shows that tea prices have fallen by 30 per cent since the beginning of the year. The drop has been caused by increased supply and depressed demand for tea on the global market.

According to KNBS, the price of a kilogramme of tea at the Mombasa auction stood at $2.05 in September, the lowest since October 2008.

Coffee prices, which are averaging at $3.28 a kilogramme currently, are also at their lowest in five years. The data also shows that earnings from coffee have been volatile over the past 10 months, due to fluctuating prices on the international market.

Tea, coffee and horticulture rank at the top of Kenya’s foreign-exchange earners, and directly benefit at least three million workers and small-scale farmers.

As a result of the falling prices, month-on-month horticulture exports hit a two-year low in July, bringing in $58.4 million, compared with receipts of $91.9 million in the same period last year, said KNBS.

Tea exports have been declining since February this year, from a high of $133.3 million in January to $89.8 million in September.

Coffee exports dropped from a high of $28.1 million in September 2012, to $18.2 million in September this year.

The falling earnings, experts said, threaten to scuttle the country’s projected economic growth rate of 5.5 per cent for this year.

Large-scale tea farmers like Williamson Tea Kenya and Kapchorua Tea Company saying they may have to pay their small-scale outgrowers less.

“It is a matter of national concern that the international tea markets have declined sharply over the period under review, with the Mombasa auction prices currently at 30 per cent below 2012, and now standing at a seven-year low,” the companies said in a joint statement.

Written by Scola Kamau and Steve Mbogo | Read more at The EastAfrican