Tea price continues to fall despite drop in volumes

The price of tea at the Mombasa auction continues to fall even as the volumes offered for sale in last week’s sale declined by 260,000 kilogrammes.

The price of the beverage dropped from Sh289 in the previous sale to Sh285 in last week’s auction, registering a drop in three consecutive weeks.

“Last week’s auction average price declined by Sh4 compared to the previous week but recorded less quantity of tea sold of 8,421,948 kilogrammes, which is 260,000kg less than the previous sale,” said Edward Mudibo, managing director East African Tea Traders Association.

Mr Mudibo said there was fairly good demand for the 150,710 packages (9,887,393 kg) on offer with 14.73 per cent of the available volumes going unsold.

He said they expect prices to firm up in the coming days resulting from the anticipated high demand at the auction.

The decline in volumes has been attributed to the wet weather as a result of the ongoing rains that has affected the tea bushes in major growing zones.

Last week, research findings revealed that Kenya’s tea production is likely to drop by nine per cent by 2020 because of climate change.
Among other losses, this would threaten the country’s foreign earnings from the crop.

A research by Tegemeo Institute — a think-tank of Egerton University — reported that tea production will be affected by increased rain and temperature as a result of global warming.

“Much effect of the climate change on crops will be felt in the Kenya’s tea sector with production expected to drop by nine per cent in 2020,” said Justus Ochieng, a research fellow at Tegemeo.

READ: Climate change storm to cut tea production by 9pc in five years

Dr Ochieng said an increase in temperature beyond 23.5 degrees Celsius would significantly reduce yields from tea.

Kenya Tea Development Agency (KTDA) this year termed climate change as one of the major challenges that is currently facing tea industry in the country.

Dry weather earlier this year cut output, driving up the average price per kilo to Sh265 in the second half, from an average of Sh245 in the prior financial year.

The volume of green leaf produced by small-scale farmers dipped to 1.03 billion kilogrammes over the period from 1.1 billion kilogrammes the previous year, the agency said.

The Agriculture, Fisheries and Food Authority, the farming regulator, said output fell to 175.2 million kilogrammes between January and June compared with 224.8 million in 2014.