Drought forces Kenyan tea grower to cut production

Kenya Tea Development Agency, the country’s biggest tea grower and exporter, said the current drought in the East African nation will cut production “heavily.”

“This is a serious drought,” Lerionka Tiampati, the agency’s managing director, said in a phone interview from the capital, Nairobi, today. “East of the Rift Valley, production is down 30 percent in the last six months,” Tiampati said.

African tea prices rose to a record at a sale in Mombasa this week as a drought in Kenya, the world’s biggest exporter of black tea, curbed yields. The water shortage is also reducing production of other crops, including corn, and has curbed electricity production from dams, with Kenya Power and Lighting Co., the monopoly distributor of electricity, introducing scheduled power cuts last week. Rainfall in some tea-growing areas was less than 50 percent of the historical average in July.

The government has said the nation’s 2009 economic growth target is under threat from the dry weather as food and energy costs rise.

Kenya’s meteorological department is forecasting that an El Nino weather pattern may bring above-average rainfall to the country between October and December, halting drought conditions.

Projections show strengthening El Nino weather in the Pacific Ocean off South America, a system that typically increases the chance of good rains along Africa’s east coast, Joseph Mukabana, director of Kenya’s Meteorological Services, said in an interview in Nairobi today.

Generating Power

KTDA, as the company is known, produces as much as 62 percent of all Kenyan tea, exporting about 95 percent of the leaf it produces. Between July 2008 and June 2009, the company produced 711.1 million kilograms (1.6 billion pounds) of the leaf, Tiampati said.

Tea production in Kenya is expected to fall 6 percent this year due to drought, while earnings may climb 5 percent, the Tea Board of Kenya said on July 30.

KTDA, which has 60 tea factories mostly using fire wood to run their boilers, is setting up a power-generating company to service its own needs and plans to sell any surplus energy to Kenya Power, Tiampati said. “A power-purchase agreement was signed with Kenya Power back in June,” he said.

Electricity costs comprise 22 shillings (29 U.S. cents), or 40 percent, of the 55 shillings KTDA spends to process 1 kilogram of black tea, Tiampati added.

KTDA has a 1 megawatt hydropower-generation project in the central Kenyan town of Imenti and is planning a 17.8 megawatt power plant on the Gura River in Nyeri, also in central Kenya, which will power four of its factories, he said.

With assistance from Sarah McGregor in Nairobi. Editors: Ana Monteiro, Antony Sguazzin.

Source: Bloomberg