Commodities

Tea price falls as volume increases amid low demand

tea

A worker picking tea. FILE PHOTO | NMG

geraldandae

Summary

  • A market report shows a kilogramme on average fetched Sh203 ($1.88), down from Sh206 ($1.91) realised in the previous sale.
  • The price of the commodity has declined as demand in the world market remains depressed.
  • Last week’s volumes increased to 7.4 million kilos from 7.1 million previously, reversing a trend of declining supply in the previous three sales.

Tea prices at the Mombasa auction slid further in the latest sale last week as volumes offered went up amid depressed demand in the world market.

A market report shows a kilogramme on average fetched Sh203 ($1.88), down from Sh206 ($1.91) realised in the previous sale.

The price of the commodity has declined as demand in the world market remains depressed.

Last week’s volumes increased to 7.4 million kilos from 7.1 million previously, reversing a trend of declining supply in the previous three sales.

In the past year, the tea market has been characterised by high volumes and low prices.

An increase in volume in the financial year ended June saw farmers attached to Kenya Tea Development Agency (KTDA) earn a marginal increase in bonus despite low prices.

This increase in bonus was also partly due to a favourable exchange rate—as the shilling weakened, earning them more when converting the sale proceeds from dollars.

The exchange rate has been in favour of exporters, with the shilling currently exchanging at an average of 108.40 against the greenback, from 101.34 at the beginning of the year.

The second payment for KTDA farmers in the financial year ended June 2020 went up slightly to Sh51 billion in the review period from Sh46 billion in the previous financial year.

During the period, small holder tea production went up by 30 percent, worsening the surplus production situation in the world, as Kenya is the leading exporter of tea.

Consequently, prices came down for the second year in a row by eight percent to $2.38 from $2.59 in the previous financial year.