Tea auction prices at two-week low on quality concerns

Tea price fell below the $2 (Sh220.16) mark during this weeks auction, the first drop in two weeks of trading on quality concerns.

A kilo fetched $1.97 (216.85) down from $2.01 (Sh221.26) in last week’s trading leading to 30 percent of the total teas offered for sale being withdrawn from the auction floor.

The volumes of the beverage offered for sale declined by 530,456 kilogrammes to reverse last week’s trend where the auction witnessed an increase of over half a million in quantities.

“There was a good general demand for the 128,659 packages (8,382,107.50 kilos) available at irregular levels for sale with 88,960 packages (5,719,925 Kilos) being sold,” said East African Tea Traders Association (Eatta).

The number of teas that were taken out of the trading floor went up to hit 2.7 million killos, representing a 30.8 percent from 27 percent in last week’s sale.

Prices at the auction have been going up for the last two months aided by government’s directive on reserve price. However, it has recorded a marginal decline in the last week and this week’s trading.

In July, 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 also followed suit and have indicated that they will be setting a minimum price for their teas at the auction to cut on losses occasioned by low cost of the commodity in the market.

KTGA chief executive officer Apollo Kiarii said the cost of production has become unbearable because of the low prices at the auction, hence their members will individually write to brokers to direct on the minimum price that their teas should be sold at.