Rising Kenyan tea output may dent Indian exports

Tea production in Kenya, so crucial for Indian tea producers, is slowly reversing the declining trend seen since the last quarter of 2005.

According to figures released by the Tea Board of Kenya, production for March 2006 increased to 19.8 million kg from 11.6 million kg registered in February.

The improved output was primarily owing to favourable weather conditions in tea growing regions, particularly west of Rift, where production doubled.

India, on its part, was looking to cash in on the shortfall in Kenyan output. But with production in Kenya picking up in March, it remains to be seen whether India's export expectations will be met.

In fact a recent Pakistan Tea Association (PTA) delegation visiting India had said that Pakistan would continue to import tea from Kenya because despite higher prices, Kenyan tea is lesser priced than the Indian produce.

In view of the ongoing rains, the Tea Board of Kenya expects production for the April-June period to surpass last year's figures.

However, production in January-March lagged output for the same period last year by 35.3 million kg due to the drought conditions that had prevailed during the first two months of the year.

According to the Tea Board, the production increase during April-June was unlikely to offset the shortfall experienced during the first quarter giving an indication that this year's output may drop by 10-16 per cent compared to last year's. The Kenyan production is crucial as it has an impact on global tea prices.

During January-March export volumes from Kenya fell below last year's figures by 15.77 per cent. Total of 75.3 million kg, valued at 10.7 billion Kenyan shilling, was exported from the country compared with 89.4 million kg, worth 10.9 billion Kenyan shilling, sold during the same period last year.

Consequently, the export unit price increased by 15 per cent from 123 Kenyan shilling per kg to 142 Kenyan shilling per kg. During the January-March period, Kenya exported tea to 33 markets worldwide.

Pakistan maintained its position as the leading importer of Kenyan tea, accounting for 32 per cent of the total exports. It imported 24.1 million kg of tea worth 3.4 billion Kenyan shilling.

Pakistan was followed by Egypt and the UK which imported 16.1 million kg and 10.9 million kg respectively.