Tea farmers in Kenya are bracing for lower bonuses this year, with early signals pointing to reduced payouts compared to 2023. The announcement of final bonuses — expected soon — will determine the financial reward for thousands of growers who depend on the crop for their livelihoods.
Analysts attribute the expected decline to a mix of global and local challenges influencing tea prices. Despite Kenya’s status as the world’s top exporter of black tea and second-largest producer after China, the country still relies heavily on bulk exports through the Mombasa auction. This system exposes farmers to global price shocks and stiff competition from major producers like India and Sri Lanka. Oversupply from these countries has forced down auction prices, while economic instability in key buyer nations such as Pakistan, Sudan, Ukraine, and Russia has weakened demand for Kenyan tea.
Fluctuations in the exchange rate have further complicated matters. Since tea is traded in US dollars, a weaker Kenyan shilling has boosted returns in local currency — but farmers are simultaneously grappling with soaring costs of imported farm inputs like fertilizer. Government subsidies have helped lower fertilizer prices from KSh 3,400 to KSh 2,500 per 50kg bag, but the relief remains limited.
Beyond market dynamics, climate change is emerging as the biggest long-term threat to the tea industry. Unpredictable rainfall and extended droughts are already disrupting yields. Experts warn that if current trends continue, Kenya’s tea production could decline by up to 25 percent by 2050, threatening the future of smallholder farmers.
A major concern is the country’s slow progress in value addition. Nearly 95 percent of Kenyan tea is exported in bulk, which means farmers miss out on premium earnings from specialty teas like green, orthodox, and purple varieties. By contrast, Sri Lanka has successfully marketed “Ceylon Tea” as a global premium brand, China has diversified into multiple specialty teas, and India has built a strong domestic market that guarantees consistent demand.
For Kenya, the way forward may lie in building a stronger Brand Kenya Tea, tapping into specialty markets, and promoting higher local consumption. Currently, only about five percent of Kenyan tea is consumed locally — a stark contrast to consumption rates in India and China. Without urgent reforms in value addition, branding, and climate adaptation, tea farmers will remain vulnerable to fluctuating global markets and shrinking returns.
