Tea worth at least Sh1.2 billion was withdrawn from the market in the latest sale at the Mombasa auction despite the value of the beverage having rallied closer to the government-backed minimum price.
The East African Tea Trade Association indicates that 31 percent of the total tea offered for sale was taken out of the trading floor despite a good price of $2.42 (Sh293) per kilogramme that prevailed at the auction.
At $2.42, the price of tea was just a dollar shy of $2.43, which is the minimum price that was introduced by the government last year for all Kenya Tea Development Agency (KTDA) teas.
“There was an improved general demand for the 194,376 packages (13 million kilos) on offer at irregular levels following quality. 133,380 packages (8.8 million kilos) were sold with 31.38 percent of the packages remaining unsold,” said Eatta.
Producers are anticipating good prices in the coming days hence the reason why they are withdrawing the commodity at the auction for future sales at best offers.
The price of tea has been on the upward trend for the last eight weeks defying high volumes that are offered at the auction.
In the latest sale, the volume of tea at the auction was more by 243,000 kilogrammes when compared with the previous sale.
The price of the commodity at the auction had remained low for at least two months between July and August, a move that signaled low earnings for growers in the current financial year.
The lower prices were attributed to a decline in demand from buyers owing to the economic woes in Pakistan and the Russia-Ukraine war that resulted in logistical challenges.
Data from the Tea Directorate indicates that tea earnings in seven months to July grew to Sh80 billion when compared with Sh71 billion that was recorded in corresponding period last year.
The price per kilo went up to $2.53 from $1.93 in the previous season, boosted by a relatively high demand for the beverage and high exchange rate against the shilling.