Kenyan tea falls short of set reserve price at Mombasa auction


Mombasa Tea Auction in session. FILE PHOTO | NMG

Tea prices at the Mombasa auction held below the set minimum price as demand remains subdued at the weekly trading with the onset of summer in key export markets.

The price of the beverage in last week’s trading increased marginally to $2.29 (Sh268) from $2.23 (Sh261) in the previous sale, well below the government set reserve cost of $2.43 a kilo.

The minimum price only applies to tea from Kenya Tea Development Agency (KTDA). The agency accounts for more than 70 percent of the teas traded at the auction.

The reserve price has seen traders opt for cheaper teas from other regional countries, giving a wide berth to expensive Kenyan beverage.

All the teas from regional countries are traded at the Mombasa auction by the East African Tea Traders Association before they are shipped out of the country for overseas market.

The demand of tea at the world market has declined due to the onset of summer in major buying countries, reducing the consumption of the beverage.

This has forced traders to go for cheaper commodities.

“The demand is now shifting towards cheaper teas that is why non-Kenyan teas and plantations are now selling well compared with KTDA teas,” said Peter Kimanga, a director with Global Teas.

The value of tea has for the last 14 weeks sold below the minimum price, which will impact negatively on farmers’ earnings at the end of this financial year.

Export earnings from tea in the 12-months to April 2022 rose to $1.22 billion (Sh142.4 billion) from $1.2 billion (Sh140 billion) in the corresponding period in 2021, Central Bank of Kenya data shows, helped by higher volumes and weaker shilling.

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