Tea prices at Mombasa auction fall despite decline in supply

The value of the Kenya tea at the Mombasa auction has started falling after a trend of good performance in the last four auctions that saw the price of the beverage attain a 12-week high.

In last week’s auction, the price of the commodity on average declined by Sh15 to trade at Sh303 a kilo from Sh318 it fetched in the previous sale.

The price fell even as the volumes of tea offered for sale dropped by 33,735 kilogrammes from 6.5 million kilogrammes in the previous week.
East African Tea Traders Association managing director Edward Mudibo said there was good general demand for the 120,677 packages (7,928,530kg) offered in the market with only 17.92 per cent remaining unsold though.

“The week recorded a lower average price of Sh303 which was Sh15 lower than last week’s Sh318. The total volume traded was 6.5 million kilogrammes which was 33,735 kilos less than last weeks,” said Mr Mudibo.

This year, the price of tea has been firming at the auction compared to last year when it remained at a historic low for the better part of the year, boosting the growers’ earnings.

The good prices witnessed during the year saw growers affiliated to the Kenya Tea Development Agency (KTDA) receive Sh28.7 billion in the second round of payment for their produce compared to the Sh19 billion they earned in a similar period the previous year.

Overall, the total earnings for the KTDA farmers rose to Sh63.6 billion for the 2014/2015 financial year compared to Sh52.6 billion in the last financial year.

The tea directorate has been pushing for the increased local consumption of tea in order to cushion the commodity from the global price volatility.

Kenya exports 95 per cent of the tea produced locally and is the largest exporter of the beverage to the world market. This is unlike China, which is the leading producer of the commodity but consumes all its tea.

Recent data from the sector regulator, the Tea Directorate, indicates that consumption stood at 1.97 million kilogrammes compared to 2.8 million kilogrammes registered during the same time last year.

The reduced consumption is a setback to the directorate’s efforts to promote consumption by Kenyans, who have for many years only taken up just a fraction of what is produced by farmers.