Extreme weather in 2022 and unusually soft demand from Kenya’s major tea customers stymied efforts to stimulate exports, resulting in a 21% decline through the end of October to 370 million kilograms, a five-year low.
Kenya exports virtually all of the black tea it produces. Egypt and Pakistan purchase 55% of Kenya’s tea in a typical year, but 2022 was anything except typical.
Extraordinary rainfall inundated Pakistan, and in June, the government urged consumers to stop buying foreign goods, including tea. Egypt ran short of foreign exchange revenue as the local currency declined 35% against the U.S. dollar. Tea is traded predominately in dollars. Sales to Egypt were down 42% to 4.4 million kg for the 10 months. These factors contributing to a 13% decline in volume at the Mombasa Auction for the period.
Kazakhstan orders declined by 40%. The United Kingdom imported 29% less tea. Sudan bought 35% less. And orders from the Russian Federation fell by 37%. Russia's invasion of Ukraine disrupted the black tea supply chain, affecting trade with CIS countries. But economic doldrums in Europe and across Africa had an even more significant impact.
In total, tea buyers purchased 98 million fewer kilograms in Mombasa compared to the same period in 2021.
Regarding weather, the Tea Board of Kenya anticipated lower yields due to a short rainy season, as the worst drought in 40 years dragged on. Lack of rain brought production down by 5.8 million kg through October, a nominal 1.34% decline.
Rainfall across the Horn of Africa declined for the fifth year. Rainfall totals in 2022 were the lowest in 70 years. The drought is the most prolonged and severe on record, threatening 20 million of the 36 million people living there. More than 1.5 million people in Kenya received humanitarian assistance in 2022 to cope with the drought.
But scarcity boosted prices, a positive change given several years of depressed foreign earnings from tea. The 10-month auction average was $2.49 per kg for bulk quantities from large plantations and $2.71 per kg for tea produced by smallholders.