Commodities

Tea fetches less fourth time in a row on supply increase

tea

A woman picks tea leaves in Nyeri. FILE PHOTO | NMG

Tea prices at the Mombasa auction declined further in the latest trading as the volumes offered increased significantly amid diminishing demand.

Data from the auction indicates a kilo of tea fetched $2.32 (Sh283) on average from $2.34 (Sh286) in an earlier sale to mark the fourth time in a row that the value has been declining.

The prices are now below the government-set minimum price for Kenya Tea Development Agency (KTDA), signifying low demand for the commodity at the auction.

“There was a fair demand for the 220,099 packages (14.8 million kilos) on offer with prices showing irregularly easier tendencies,” said East Africa Tea Trade Association (Eatta).

The volume of tea withdrawn during the sale was 5.2 million kilos of the total quantities.

The Ministry of Agriculture set $2.43 (Sh297) as the minimum price for a kilo of tea for all the KTDA teas last year to safeguard farmers' earnings after the value of the commodity fell below the production cost.

The volumes of tea offered at the auction during the sale significantly increased by 908,136 kilos to reverse a drop witnessed in the last month.

Previously, the lower prices had been attributed to a decline in demand owing to the economic woes in Pakistan and the Russia-Ukraine war that has visited hiccups on economies.

The Russia-Ukrainian war cut the tea demand to the world market as it disrupted the supply chain.

Pakistan is a key buyer of the Kenyan tea, accounting for nearly 40 percent of the total exports with the economic turmoil facing the country resulting in low uptake of the beverage by this Asian nation.

In June, the Pakistani government urged its citizens to cut the volume of tea that they consume and moved ahead to limit the amount of money that importers can access from the banks to curb expensive imports in the wake of a weakening rupee.

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