Tea prices climb to seven-week high on improved quality

Tea prices at the Mombasa auction rallied to a seven-week high in the latest sale, marking the second successive week of climbs on improved quality.

A market report from the auction shows a kilogramme on average fetched Sh208, up from Sh206 in the previous sale.

The growth in value defied an increase in quantities offered for sale, which went up by 412,000 kilogrammes during the auction.

Last week’s volumes increased to 8.4 million from 7.9 million kilogrammes previously to mark the fourth straight sale that the volumes have gone up.

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

Favourable exchange rate and high volumes of tea in the previous financial year increased bonus to be paid to farmers this year despite low prices of the commodity in the world market.

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

During the year under review (July 1, 2019 – June 30, 2020), 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 corresponding period.

Demand for tea in the world market has remained depressed because of Covid-19 disruption, which has interfered with the movement of the commodity.