Smallholder farmers attached to Kenya Tea Development Agency are still grappling with high withdrawals of their produce at the auction as buyers keep off expensive beverages for cheaper ones.
In the latest auction, 44 percent of KTDA teas that were offered for sale were withdrawn after buyers kept off because of the minimum price that has made the commodity expensive in the market.
KTDA had offered 92,000 packages of tea for sale at the Mombasa auction with 40,100 taken out of the trading floor.
Traders have argued before that the minimum price of $2.43 per kilogramme set by the government two years ago to cushion farmers from low earnings has made the KTDA teas expensive when compared with other quality offers that they can get at the same price.
Overall, the average price per kilo at the auction declined marginally from $2.22 to $2.18 but remained within the range of a one-year high.
The prices have been surging in the last one month to recover from a low of $2.02 in January, which was the lowest to be recorded since the beginning of the year.
Traders say there has been increased demand from buyers, especially in Egypt and Pakistan- Kenya’s top buyers as the two countries that are predominantly Muslim observe the holy month of Ramadhan when the beverage is taken in high quantities.
“Prices have improved in the last couple of sales because of a good demand from Egypt and Pakistan,” said Peter Kimanga, a Mombasa-based tea trader.
KTDA is struggling with high volumes of teas from last year that have not been bought leaving the agency with a stockpile of over seven million kilogrammes.
The agency said last month that it was in talks with Pakistani traders to buy the quantities that are yet to be sold.
Pakistan is grappling with a serious shortage of teas that had cut the purchases at the Mombasa auction, leading to suppressed prices.