Commodities

Tea prices plunge further to 10-year low as volumes increase

tea

Workers at a tea estate in Kericho. FILE PHOTO | NMG

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Summary

  • Tea prices at the Mombasa auction continued on a downward spiral in last week’s auction, falling to a decade low as the sale witnessed a big increase in volumes offered for trade.
  • A market report from the East African Tea Traders Association (Eatta) shows the price of the beverage declined to an average of Sh178 per kilogramme last week, down from Sh181 that was realised in the previous sale.

Tea prices at the Mombasa auction continued on a downward spiral in last week’s auction, falling to a decade low as the sale witnessed a big increase in volumes offered for trade.

A market report from the East African Tea Traders Association (Eatta) shows the price of the beverage declined to an average of Sh178 per kilogramme last week, down from Sh181 that was realised in the previous sale.

The lower price saw 18 percent of the tea offered for sale withdrawn from the auction as traders wait to see if the prices will improve this week. It may be a forlorn hope, however, given that the price of the beverage has been in constant decline in the last six weeks.

“Out of 13.6 million kilos available for sale, 11.1 million were sold while 18.3 percent remained unsold,” said the EATTA.

The poor prices in recent weeks are also pointing to lower earnings for farmers in the financial year, which ended on June 30. Tea earnings in the first four months of the year stood at Sh46.8 billion ($434 million), data from the Central Bank of Kenya shows, down by 5.4 percent from the income of Sh49.5 billion ($459 million) in 2020.

The price decline was partly due to an increase in volumes by over 800,000 kilogrammes during the auction. This is the first time in the last month that the amount of tea offered for sale has gone up.

According to the sector regulator, lower demand of the beverage globally has also been a factor in the depressed earnings.

“Demand has also been affected to some extent by reduced consumer purchasing power due to the effect of the global economic recession that is perpetuated by the Covid-19 pandemic as well as the devaluation of some foreign currencies against the US dollar,” said the Tea Directorate.