The Joe Biden administration is eager to start discussing how it can apply its ‘build back better’ mantra to commerce with Africa when it ... virtually hosts the continent’s trade ministers this week. For their part, America's African partners want to make sure that Washington doesn’t bulldoze their two-decade-old, duty-free access to the US market in the process.
Prices at the Mombasa tea auction have averaged around $1.80 this year, consistently below the critical $2 mark, and in early July touched a five-year low of $1.65. Current prices will “further impoverish” many farmers, with small-scale farmers the most affected, Manyinsa, says.
A dedicated agency is needed to give priority to lifting exports to the main buyers of Kenyan tea, namely Pakistan, Egypt, Sudan and the United Kingdom, Manyinsa says. Kenya also needs to research tea plant species with high yields which are likely to have tolerance to climate change, he adds.
According to the Economist Intelligence Unit (EIU), Kenya is the only major producer where tea production increased significantly in 2020, reflecting a cyclical recovery after a drought-induced drop in 2019. Production in China, which accounts for 45% of global output, is likely to rebound in 2021 and 2022 as the government seeks to lift agricultural productivity, the EIU says.
Improved storage facilities to ensure that unsold tea is available for future export are key, Manyinsa says. “The current glut is only a seasonal event and therefore the excess tea should be well packed and stored to be sold later.”
- Tea farmers also need to be educated on best practices like pruning, the correct type of fertilizer to use and correct methods of harvesting, he adds.
- If the prices continue to deteriorate, listed tea companies such as Williamson, Kapchorua, Limuru and Sasin will all be affected as over half of their incomes come from tea farming, Manyinsa says.
- But the seasonal time of the glut means there are still grounds for optimism in these shares, he adds. “Farmers remain confident of the recovery.”
Manyinsa is unimpressed by plans for the Kenya Tea Development Agency (KTDA) to list on the Nairobi Securities Exchange. “KTDA should not be listed in the NSE market, since it is a politically run entity which might be subject to manipulation,” he says. “The agency should focus on serving the small-scale farmers who are the majority stakeholders.”
- The KTDA should be monitoring temperature change in highland regions and the effects of heavy rains on production, Manyinsa says.
Climate change further complicates the long-term outlook for Kenyan tea. A study by Sadeeka Layomi Jayasinghe and Lalit Kumar for the journal Agronomy in 2020 found that climate change will reduce optimal conditions for tea production in Kenya by about a quarter by 2050.
That means Kenya will be harder hit than rival producers Sri Lanka and China, which will see areas with optimal conditions recede by 14% and 4.7% respectively.
- The authors say that optimal growing areas around Mount Elgon and Mbeere will be totally absent under all climate projections by 2050.
- In Kenyan areas with average tea growing conditions, the study found that production will fall by 39% by 2050. It will be very hard for tea producers to establish new growing areas in the country, it adds.
Climate change resistant tea plants need to be identified and distributed to both small-scale and large-scale farmers, Manyinsa argues. He also suggests that farmers may also want to consider planting avocado plants alongside their tea farms as a way to diversify.
Research from Manyinsa and Willis Nalwenge at Kingdom Securities argues that Kenya has the potential to become a key exporter of avocados, as well as macadamia nuts.
Kenya’s tea industry must find ways to adapt to climate change to ensure its long-term future.
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