Traders withdrew teas worth Sh1.1 billion from the latest auction as prices remain low in the wake of subdued demand.
Data from the East African Tea Trade Association (Eatta) indicates that 3.9 million kilogrammes of tea were withdrawn during the sale as the price dipped to $2.32 (Sh268.8) a kilo from $2.40 (Sh278) in the previous sale.
The latest price is below the minimum value of $2.43 (Sh281) that the government set last year to safeguard farmers' earnings after a series of poor prices that had dropped below production cost. The minimum price, however, is only applicable to tea from Kenya Tea Development Agency (KTDA).
The tea that was not sold in this week’s trading represented 31 percent of the total volumes that were offered for sale, marking the largest quantities to have been withdrawn this year.
“There was a reduced demand for the 192,697 packages (12.7 million kilos) on offer at easier rates with 132,288 packages (8.8 million kilos) being sold. 31.35 percent of the packages remained unsold,” said Edward Mudibo, the managing director of Eatta.
Prices have remained low at the auction in the last four weeks, which is set to continue hurting incomes from one of Kenya’s leading foreign exchange earners.
This comes at a time Russia and Ukraine are at war, cutting demand to Moscow, which is one of the country’s largest buyers.
The auction report indicates exporters to the Russian market were quiet at the auction this week and did not place orders.
Russia has been slapped with sanctions by European countries and the US. Some sanctions include the exclusion of Moscow from SWIFT, a payment system that allows banks to transact with other financial institutions.
The US has also banned Russia’s central bank from trading in dollars, making it difficult for the country to buy as most global transactions are settled using the greenback.