Kenyan Tea Growers Send Workers Home After Drought Cuts Harvest in Half
Kenyan Tea Growers Send Workers Home After Drought Cuts Harvest in Half
(Bloomberg) -- Kenyan tea growers sent half of their workers on leave or assigned them non-core duties due to a prolonged drought that’s halved production at leaf-processing factories.
Prices of the commodity could climb amid a looming shortage in the world’s biggest exporter of the black leaves variety, according to traders.
“We are operating for three days a week because there is no crop to pluck,” Kenya Tea Growers Association’s Chief Executive Officer Apollo Kiarii said by phone Tuesday. “About half the number of workers who are supposed to run the operation fully are not working.”
Workers usually operate six days a week, according to Kiarii.
While rainfall was expected to peak in April, 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.
“With the reduced production, the prices should be going higher,” said Edward Mudibo, managing director of the East African Tea Trade Association, which runs the Mombasa tea auction. But “there is still so much stock out there and the effect may be felt after a month when all the tea that is in the pipeline has been delivered,” Mudibo said.
The average price of tea at Kenya’s auction in the port city of Mombasa declined about 2 percent to $1.93 per kilogram last week when about 11.1 million kilograms were offered. That’s less than $0.5 above the grower’s operating costs, according to Mudibo.
Companies under the Kenya Tea Growers Association employ as many as 55,000 workers, Kiarii said. Kenya earned 141 billion shillings ($1.4 billion) from a record crop of 492.9 million kilograms in 2018.
The industry body represents the country’s biggest tea estates, accounting for 40 percent of total output, while small-scale farmers producing the rest are grouped under the Kenya Tea Development Agency.
To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net
To contact the editors responsible for this story: David Malingha at dmalingha@bloomberg.net, Helen Nyambura
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