Currency drop helps Kenyan tea exports top $1 Billion in 2022

(Bloomberg) —

Kenya’s earnings from tea exports in 2022 increased despite a drop in volumes, as its currency weakened against the US dollar and prices of the commodity improved.

The world’s largest black tea exporter reported an increase in shipments of 1.5% to 138 billion shillings ($1.07 billion) last year, the Tea Board of Kenya said in a statement on its website. 

The average price of the leaves at Kenya’s auction jumped 18.6% to $2.49 per kilogram last year. Additionally, the weakening of the Kenyan shilling by about 9.1% against the US dollar in the period helped the nation’s key export generate more foreign currency.

“Increase in export earnings was attributed to depreciation of the Kenya shilling against USD as well as improved prices,” according to the report.

The earnings rose even as volumes of the shipments declined 19% to 450.3 million kilograms, the first drop since 2017. Output fell slightly to 535 million kilograms because of unfavorable weather in the growing regions.

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Kenya banks on tea exports, tourism receipts, diaspora remittances and horticulture shipments, to generate the foreign currency it needs to pay for imports and service external debt. The nation’s foreign reserves have been under increasing pressure from elevated oil prices, falling to $6.57 billion by March 9 or an equivalent of 3.67 months of import cover.

Agriculture products, including tea, flowers and corn, account for 20% of Kenya’s gross domestic product and employ more than 40% of the population, according to a Central Bank of Kenya survey conducted in January. Most of Kenya’s tea is shipped to Pakistan, Egypt, the United Arab Emirates and the UK. 

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