Economy

Tea price hits highest this year on reserve price, rising demand

tea

Workers at a tea estate in Kericho. FILE PHOTO | NMG

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Summary

  • The price of tea at the Mombasa auction has this week climbed to the highest level seen this year on the back of good demand and a government backed reserve price.
  • The average price of a kilogramme of the beverage rose past the key two-dollar mark to hit $2.04 (220) from $1.97 (Sh212) in last week’s trading, maintaining a seven week of rally at the auction.

The price of tea at the Mombasa auction has this week climbed to the highest level seen this year on the back of good demand and a government backed reserve price.

The average price of a kilogramme of the beverage rose past the key two-dollar mark to hit $2.04 (220) from $1.97 (Sh212) in last week’s trading, maintaining a seven week of rally at the auction.

“There was better absorption and much-improved demand for the 129,475 packages (8.41 million kilogrammes) available for sale with 87,895 packages (5.68 million kilogrammes) being sold,” said the East African Tea Traders Association (Eatta).

The higher price was also helped by declining volumes of the beverage at the auction, which recorded 132,495 fewer kilos compared with the previous sale.

The lower volumes have seen the auction cut the trading days to two from three.

Last month, the Ministry of Agriculture issued a directive that would require traders to pay a minimum of Sh183 for a kilo of Kenya Tea Development Agency teas at the auction following a sharp decline in prices that the government said was subjecting farmers to losses.

Multinational firms have followed suit saying they want to set a minimum price for their teas at the auction to cut on losses occasioned by low cost of the commodity in the market.