A shortage of hard currency in Egypt and Pakistan will continue hitting the tea market in Kenya with the listed firm Kakuzi projecting low returns this year from the commodity on the back of woes facing the two top buyers of Kenyan beverages.
Pakistan and Egypt account for 55 percent of the total tea exports that Kenya sells to the world market.
Camellia Plc, the UK-based parent company of Kakuzi, says the price for tea from year to date has remained low when compared with the same period last year, occasioned by low demand from the two countries.
The firm says pricing levels looking forward will depend on production volumes and quality as well as the continued shortage of hard currency in Pakistan and Egypt.
“In 2023 our prices to date have been significantly below that of the same period of 2022 reflecting a continuing reduced demand from Kenya’s largest two buyers, Pakistan and Egypt,” said the company in its financial report for the year ending December 2022.
“Pricing levels looking forward will depend on production volumes and quality as well as the continued shortage of hard currency in these regions.”
The two countries have been grappling with a shortage of dollars that has seen Egypt devalue its pound while Pakistan imposed restrictions on imports to preserve currency in the country.
A shortage of forex currencies in Pakistan and Egypt significantly hit Kenya’s tea exports in February cutting the earnings by at least Sh5 billion.
Kenya Tea Board (TBK) says the shortage of dollars, coupled with the ongoing war in Russia cut the export volumes to Pakistan, Egypt and Moscow by 33 percent in February compared with the corresponding period last year
The TBK says exports to these countries dropped by 17 million kilos in February, the highest decline to be recorded since 2020.
“Lower export volumes were due to less import by Pakistan, Egypt and Russia whose combined volumes of import was less by 17.4 million kilogrammes owing to challenges of forex reserves affecting these markets and shipping and logistics occasioned by the Russian-Ukraine war,” said the TBK.
Kakuzi says its crop for the first quarter of the year is significantly ahead of the same period last year, raising hopes of good earnings on the back of high volumes that may offset the low prices.
The firm says its Kenyan estate’s crop production was down 12 percent on account of dry weather last year when compared with the previous year while the total factory volumes were down nine percent.
Source: Business Daily Africa