By Duncan Miriri
NAIROBI, Jan 21 (Reuters) - Kenya's output of tea is expected to rise more than 15 percent this year and prices are likely to be stable, the head of its Tea Board said on Thursday.
The country's earnings from tea rose to 68 billion Kenya shillings ($896.4 million) in 2009 from 62 billion the previous year after prices climbed due to a global deficit caused by dry weather, said Sicily Kariuki, the board's managing director.
The East African nation is one of the leading exporters of black tea, which is an important source of foreign exchange in the region's largest economy.
"We had projected about 65 billion, we were round about 68 billion shillings for two reasons -- we sustained a stable exchange rate against the dollar and also the high prices," she said.
On expected production in 2010, Kariuki said: "The industry moves in a cyclical manner...It is still a little bit early... but anywhere over 15 percent, you can be sure you will see an increase of that nature." Kariuki attributed last year's price gains to dry weather in the three major producers, India, Kenya and Sri Lanka, which caused output in all three to fall.
"If the shortfall was only Kenya, perhaps we would have not seen the increase in prices globally. If it was just one country you know consumers would have just shifted to the next," she said.
Kenya produced 315 million kg of tea in 2009, down from 345 million in the previous year, but slightly more than the board's own projection, Kariuki said, adding the average price for the year rose.
"We performed at slightly over $2.7 per kg compared with $2.3 kg the previous year," she said.
She attributed her price expectations for 2010 to the fact retailers had adjusted their prices upwards on the basis of last year's gains in auction prices. She also cited production costs.
"Because of the cost of production that has gone up over time without commensurate adjustments by the producers, there will be every effort to sustain prices at a reasonable level so that they break even," Kariuki said.
"We are not likely to see the very low kind of prices we have seen in the past," she said. (Editing by Anthony Barker)