Tea price hits two-month low on increased volume

Traders at the Tea Trade Centre in Mombasa. PHOTO | FILE

The price of tea at the Mombasa auction continued on a downward trend, hitting a two-month low in the latest trading.

Kenyan tea has been performing poorly in the last two months in the wake of growing volumes at the auction.

At this week’s sale, a kilogramme traded at Sh295 compared to Sh300 it fetched in the previous auction.

The volume of tea offered for sale increased from 6.5 million kilogrammes last week to 6.7 million kilogrammes. Traders had anticipated the volume of tea at the auction would reduce starting last month but it has instead risen in the last month.

Majority of tea farmers had pruned their bushes during the cold season - July and August- in a move that had cut the supply of the green leaf in the factories.

The recent drop comes at a time farmers affiliated to the Kenya Tea Development Agency (KTDA) are eagerly awaiting the declaration of bonus next week. KTDA directors are currently compiling the bonus report for the individual factories with the agency’s finance board slated to meet next week to declare the payout.

The Tea Directorate has indicated that farmers will earn slightly higher bonus this year compared to the last financial year, following a trend of good prices witnessed in the last six months.

Total earnings for farmers affiliated to the KTDA fell from Sh69.2 billion in 2013 to Sh52.9 billion in 2014, a 23 per cent decline.

However, the KTDA has warned the good prices might not necessarily translate into a rise in earnings for farmers in the year that ended June as other aspects of production would have to be incorporated in deciding the bonus.

The price of black tea in the market has been unstable in the past two years, prompting the KTDA, which represents about 66,000 small-scale holders, to diversify to specialty tea to grow revenue.

The move seeks to expand Kenya’s market share beyond the traditional markets of Egypt, Sudan, Pakistan and Afghanistan who are the major buyers of black tea.

Sri Lanka, Morocco and Middle East countries consume more orthodox tea, which fetches twice as much compared to black tea.

KTDA has set up new production lines for processing orthodox tea in Meru, Kisii and Kirinyaga.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.