A supply glut and lower production have seen depressed earnings from tea and coffee in Uganda and Burundi.

In results for the 2014 season, Uganda reported coffee exports of 3.5 million 60kg bags worth $394 million, representing a 2.3 per cent drop in volume and nine per cent decrease in value from the previous year. Uganda sold its coffee at an average of $1.87 per kg, down from $2 per kg the previous year.

Norman Mutekanga, strategy and business development manager at Uganda Coffee Development Authority, said Uganda’s coffee export volumes are projected to remain flat this year as maturing trees planted over the past five years counter an anticipated decline in production after the sector was hit by the coffee twig borer pest.

In contrast, Uganda’s tea exports are projected to surge five per cent, peaking at 62,000 tonnes, although earnings are likely to remain flat due to a supply glut on the international market. Earnings from cocoa also increased from $46 million in 2013 to $58 million last year, as a result of higher prices and volumes that rose from 19,430 tonnes to 22,000 tonnes — cocoa trees planted a decade ago are now yielding fruit.

READ: Weather, global prices affect coffee revenues

Unpredictable weather

In Burundi, earnings from coffee fell from $66.3 million in 2013, to $23.8 million in 2014; export volumes fell from 24,000 tonnes to 9,890 tonnes in the same period. This was attributed to unpredictable weather conditions and a lower-yielding crop cycle.

Burundi’s earnings from tea fell six per cent in the first nine months of the year to September 2014, as export volumes rose 5.2 per cent to 7.743 tonnes. The average export price per kg for Burundi’s tea declined from $2.42 to $2.16 over the same period.

“Overall earnings as well as the export price for Burundi’s tea dipped due to large quantities of tea available on the regional market,” said Joseph Ndahigeze, a director of the state-run Burundi Tea Board.

Kenya and Rwanda project higher earnings from coffee, but lower from tea, according to annual performance results to be announced in the next few weeks.

Higher production will insulate Kenya and Rwanda’s coffee earnings from the impact of falling prices, as with Uganda and Burundi, but their earnings from tea will fall due to a combination of lower output and a drop in prices.

Kenya’s coffee export volumes are projected to increase 15 per cent to 49,500 tonnes, buoyed by improved weather, better crop husbandry and more investment by farmers.

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Tea earnings are projected to drop due to stiff competition from India and China and glut in the global market, Kenya Tea Board managing director Elizabeth Kimenyi said. Since 2014, there has been increased rivalry between Kenya, India and China over control of key tea markets including Pakistan, the United Kingdom, Afghanistan and the United Arab Emirates.

Rwanda’s coffee export earnings are projected to increase from $55 million to $70 million this year due to increased production. According to Rwanda’s National Agricultural Export Development Board, the country’s coffee export volumes are projected to increase from 20,000 tonnes to 23,000 tonnes as a result of favourable weather conditions.

Rwanda exported 24,000 tonnes of tea last year, fetching over $51 million; this was well below the target of $83 million. Rwanda exported 21,000 tonnes of coffee in the previous year, earning the country $56.56 million.

The relatively low performance last year was attributed to low prices on the international market, at about $2.5 per kg, down from $2.77 the previous year.

“This year, we hope for the best as we increase our production capacity,” said Corneille Ntakirutimana, the head of the tea division at Rwanda’s National Agriculture and Exports Board.

Rwanda aims to increase production capacity to 31,000 tonnes this year, with a revenue target of $73 million attributed to improved quality of tea as well as higher prices on the international market.

East Africa exports its coffee, tea and cocoa mainly to Europe, Pakistan, Egypt, Sudan and Ireland.

By Isaac Khisa and Alex Ngarambe