Tea price drops to Sh217 marginally on rising volumes

The average price of tea at the Mombasa Auction declined marginally but remained above the two dollar mark in this week’s trading as the volumes of the beverage offered for sale went up.

A kilogramme of the beverage fetched an average of $2.01 (Sh217) in the auction, down from $2.04 (Sh220) in last week’s trading with traders reporting a good demand for the beverage.

The volume offered for sale increased by 571,425 kilogrammes to mark the first time that the quantities have gone up in the last five weeks.

“There was good general demand for the 132,399 packages (8.66 million kilos) available at irregular levels for sale with 96,584 packages (6.25 million kilos) being sold,” said East African Tea Traders Association (Eatta).

The volume of tea that was taken out of the trading floor went down to 27 percent when compared with 32 percent last week.

The prices at the auction have been going up for the last two months aided by government’s directive on reserve price.

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 have followed suit and they want to set 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.