Technology

Mombasa tea auction goes fully tech after two-year pilot

chai

Chai Trading Company general manager Francis Muthamia demonstrates how the tea auction is conducted online on October 5, 2020. PHOTO | LABAN WALLOGA | NMG

Summary

  • EATTA chairperson Arthur Sawe said the platform would increase farmers’ and dealers’ profits by cutting operation costs.
  • The platform has unique features to enable tea dealers to analyse the market trends affecting the tea trade in the world.
  • According to the EATTA, automation will drive tea sales, which will be achieved through time reduction in the tea trading cycle and cost reduction in the trading process.

Kenya has automated tea trade by unveiling the Integrated Tea Trading System (iTTS), which will end 60 years of “out-cry” trade.

The East African Tea Trade Association (EATTA) recently launched the Sh214 million iTTS programme funded by the Danish International Development Agency (DANIDA) after two years of piloting, which will end the physical interaction of tea traders.

EATTA chairperson Arthur Sawe said the platform would increase farmers’ and dealers’ profits by cutting operation costs.

“The digitisation (iTTS) seeks to fill gaps in the current procedures, which are done manually including membership and cataloguing.

“This will reduce cost and time as traders would not have to travel physically to trade their teas,” said Mr Sawe.

“To ensure sustainability, the cost of maintenance of the system has been distributed among users based on a kilogramme of tea transacted and appointment depends on the business model and level of utilisation by the membership.”

The platform has unique features to enable tea dealers to analyse the market trends affecting the tea trade in the world.

According to the EATTA, automation will drive tea sales, which will be achieved through time reduction in the tea trading cycle and cost reduction in the trading process.

The weekly Mombasa Tea Auction also involves the sale of teas from various countries in the region, including Mozambique, Tanzania, Malawi, Burundi, Ethiopia, Democratic Republic of Congo, Rwanda, Madagascar and Uganda.

East African Community PS Kevit Desai said the system would replace the manual system, which added high transaction costs for traders, delays in payments and exportation, as well as a limited timeline for trading.

“The manual procedure involves a couple of middlemen, ranging from producers, warehouses, brokers, buyers, and middlemen. In the long run, the trickle-down effect is that the farmers have little say on the prices of their tea but in this, farmers will benefit immensely,” said Dr Desai.

On the new platform, users will use simple gadgets such as mobile phones to trace the movement of their tea across factories and shipping companies and it has unique features to enable tea dealers to analyse the market trends affecting the tea trade in the world.

Speaking on the launch two weeks ago Morgens Strunge Lursen, Counsellor at the Danish Embassy in Kenya, said the digitisation of the Mombasa Tea Auction is just one of several projects DANIDA supports in the region to ease cross-border trade.

“The launch of the iTTS is particularly exciting because it helps position such a critical sector for future growth and success by driving efficiency and supporting both increased traceability and information exchange,” said Mr Lursen.

Having expedited the automation process in early May 2020 at the onset of the Covid-19 pandemic, the project helped the industry meet social distancing requirements in line with the health protocols and facilitate safe trade in the East African region.

The buyers were able to bid for the teas from the comfort of their office or residence.

The iTTS is expected to shorten the pre-auction, auction and post-auction stages, create the potential for increased frequency in trading volumes, reduce the tea trading cycle by about 65 percent from the current 45 to 60 days to less than a month and fast track payments to farmers and reduce the need to take loans to finance farming operation.

EATTA managing director Edward Mudibo said the platform would ensure that stakeholders at the auction, including farmers, buyers and sellers receive real-time information on what is happening on the auction bourse, which will boost confidence in the process.

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