Tea firms to set minimum prices at Mombasa auction

Multinational firms will set a minimum price for their tea at Mombasa Auction to cut losses occasioned by the low cost of the commodity in the market.

The Kenya Tea Growers Association (KTGA), an umbrella body for the multinational firms, has written to the East African Tea Traders Association (Eatta), which manages the auction, informing it of the decision, just a month after the State introduced reserve price for smallholder farmers.

KTGA chief executive officer Apollo Kiarii said the cost of production has become unbearable because of low prices at the auction, hence their members will individually write to brokers to direct on the minimum price that their teas should be sold for.

Mr Kiarii said over the last few years, the auction average price for tea has been on a downward trend, threatening the sustainability of the sector.

“I write to inform you that our members will individually be communicating to their brokers on the minimum/reserve price,” said Mr Kiarii in the letter.

“The current prices offered at the auction, which are frequently below cost of production, are not sustainable and unless something is done, the entire sector and the livelihoods it supports are at risk,” he added.

Agriculture CS Peter Munya introduced the minimum price at the auction for Kenya Tea Development Tea Agency farmers last month setting a minimum price at Sh183, citing low value for the beverage amid high cost of production.

The new price regime saw millions of kilos of tea offloaded from the auction floor as traders kept away from KTDA teas as they opted to buy beverages from other firms that were seen to be cheaper.