Financial troubles loom for Kenyan farmers as tea prices plummet
Farmers in Kenya are bracing themselves for heavy losses due to rapidly falling tea prices at the Mombasa tea auction. CTC black tea fetched prices at five-year lows, with some crops selling below their cost of production. Recently, tea traded at $2.17 a kilo, compared to $3.17 a year ago. Experts say the crisis is caused by a drastic increase in supply. Kenya produced 314 million kilograms of tea in 2009. This year, that number is expected to reach 415 million. In the meantime, CTC tea output continued to grow in competing countries like India and Sri Lanka. According to the East Africa Tea Trade association, the whole industry is facing serious cash flow issues and high production costs have only exacerbated the problem. Kenyan tea accounts for about 10% of the world's total output and 23% of the world's tea exports.