June 16 (Bloomberg) -- The tea crop in Uganda, Africa’s third-biggest grower, is expected to benefit from a rainy season that’s countering the effect of a drought in the first quarter.
Rains that started late March revitalized the crop, raising yields, George William Ssekitoleko, executive secretary of the Uganda Tea Association, said in the capital, Kampala. Production may match last year’s record yield of 61 million bags, he said.
“The current rains may easily offset what we lost during the January to March drought,” he said, without elaborating.
Uganda exports more than 95 percent of its crop, mainly at the world’s biggest auction in Mombasa, Kenya. It raked in $100 million last year, Ssekitoleko said. At least 70 percent of the crops from Kenya, Uganda, Malawi, Tanzania, Rwanda and Burundi are sold to Egypt, Pakistan, the U.K., Afghanistan and Sudan.
However, auction prices at a 13-year low threaten to discourage investment by farmers including in fertilizers costing at least $700 a metric ton, Ssekitoleko said. “If the low prices persist it will affect production as farmers will scale back on labor and application of fertilizers,” he said.
Tea offered at Mombasa grew by 60 million kilograms (132 million pounds) in the first nine months of last year due to increased yields in the region, according to the association. At least 60 percent of the crop is produced by estate farmers and the rest is by small scale growers who sell to estates.
Uganda is Africa’s biggest grower after Kenya and Malawi. The Ugandan unit of McLoed Russell India Ltd. produces at least a quarter of the country’s crop, according to the association.
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