Kenya raises 2013 tea output forecast on good weather

By Duncan Miriri

NAIROBI (Reuters) - Kenya has raised its tea production and export earnings projections for this year thanks to good weather, while prices were expected to rise in the second half of the year, the regulator Tea Board of Kenya said on Friday.

The east African producer, which is the world's biggest exporter of black tea, expects to produce 410-415 million kg of tea, up from 369 million kg last year, the board said.

It expects earnings to rise to 120 billion shillings up from 112 billion shillings last year and higher than the board's estimate in January for earnings of 116 billion shillings. Tea is one of Kenya's main sources of hard currency.

"The weather has been good. We have had good rains throughout the year and we don't have frost or any other adverse weather conditions," Peter Kibiku, the board's research and information manager, told Reuters.

Speaking on the sidelines of a conference, he said the average price per kg was expected to rebound in the second half of this year after slipping to $2.87 per kg in the first half from $3.02 per kg in the same period last year.

"Going forward we are going to see an upward trend particularly during the third quarter of the year," he said.

He said the cold season had already set in, which normally leads to a drop in production and a spike in prices.

Prices of tea have risen over the last five years on the back of the commodities boom driven by higher demand in emerging markets like China and India.

Samuel Ogola, the technical services manager at the board, said higher prices had boosted farmer income, which was being re-invested and helping lift production.

"There is a lot of rehabilitation of farms that were not well taken care of," he said. "There is a bit of expansion. Quite a number of middle and large estates are replacing old tea bushes with new high yielding clones and those are driving production."

The main risk facing the Kenyan tea industry was an over-reliance on black tea, he said, adding farmers should consider diversifying into other products, such as purple and green teas.

The east African nation was also cultivating new markets in Africa. Its main buying nations are Egypt, Pakistan and Britain.

"We are looking at the west of Africa like Nigeria, Niger, Ghana and Mali. They are mainly not very good tea drinkers but the demand is substantial based on our initial research," he said.

Source: http://news.yahoo.com/kenya-raises-2013-tea-output-forecast-good-weather-124837681.html

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