Drought in Kenya may be a big boon for Indian tea

Kolkata: A drought in Kenya that has affected the tea production in the African nation may turn out to be a boon for Indian second flush tea, which has just started to arrive in the market. Prices of Kenyan tea have gone up 15 per cent, which is likely to boost market sentiment for the Indian second flush teas, say industry executives.

Exports of Indian teas to countries such as Egypt, UK, Pakistan, Russia and Afghanistan are also expected to rise due to a shortage of Kenyan CTC teas in the world market.

“Last year, Kenya had produced a record crop of 492.9 million kg, which had dampened the price of teas in the global markets. Indian teas also suffered due to this price fall. But this year, the crop in Kenya will be much less,” Azam Monem, director, McLeod Russel India, and former chairman of Indian Tea Association, told ET. Kenyan tea growers have sent half of their workers on leave or assigned them to non-core duties due to a prolonged drought that has halved production at leaf-processing factories, according to international media reports. Rainfall was expected to peak in April, but most parts of the country have remained dry with high temperatures, according to the Kenya Meteorological Department.

The dry spell is expected to continue for the rest of the month in most regions. “In Kenya, winter sets in May-June and there will be no crop in July. This is the time when second flush teas from our country are available in volumes. So, this may turn out to be an opportunity for us and our export volumes can go up too,” Monem said.

Kenyan tea prices may touch $3 per kg within the next fortnight due to the shortfall, Monem said. Currently, Kenyan tea is available at $2.3 - $2.4 per kg at the Mombasa auctions. India exported 249.11 million kg of teas in 2018 against 251.91 million kg in 2017, a marginal drop of 1.11 per cent.

In the first two months of 2018, exports of Indian tea have dropped by 6.98 per cent in volume terms compared to 2017, although value-wise it has gone up 8.81 per cent compared to 2017.

“The real impact of prices will be felt in the next two weeks when second flush CTC teas start arriving at the auctions,” said J Kalyanasundaram, secretary, Calcutta Tea Traders Association.