Tea price reels as sanctions on Russia hurt demand


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

The price of tea at the Mombasa auction continues to perform dismally as the sector reels from the effects of war in Russia, which has cut down demand for the commodity.

Prices have been declining consistently in the last three weeks to hit a low of Sh277 a kilo in the latest auction.

This marks the lowest price since the second week of January, according to East African Tea Trade Association (Eatta).

The decline in price saw 17 percent of the teas withdrawn, which is the largest quantity to have been taken off the trading floor by sellers since the beginning of the year.

“There was reduced demand for the 192,659 packages (12.6 million kilos) offered for sale with 158,616 packages (10.5 million) being sold,” said Edward Mudibo, Eatta managing director.

Mr Mudibo said that exporters to the Russian market were absent at the auction this week and did not place any orders.

The price of tea has been on a downward trend since Russia made threats and subsequently invaded Ukraine, dropping from a high of Sh302 per kilo to the current levels.

Russia bought 29.61 million kilos of tea worth Sh6.25 billion last year from 25.14 million kilos valued at Sh5.02 billion in 2020, according to data from the Tea Directorate.

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 the Central Bank of Russia from trading in dollars, a move that will make it difficult for the country to trade commodities with the world market as most global trade is conducted using the greenback.

“Even if you are lucky to get tea to Russia because we don’t know whether tea falls under foodstuff or beverage, how would you get payment when sanctions are there that they cannot remit money from that country?” Mr Mudibo posed.

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