Commodities

Tea prices to go up on winter demand

tea

A worker picking tea. FILE PHOTO | NMG

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Summary

  • Tea prices at the Mombasa auction are projected to rise in the fourth quarter on improved demand as winter sets in key markets.
  • The regulator, Tea Directorate, projects that the price of the commodity, which has for the better part of the year been at below $1 (109) a kilo, is expected to rise to $2 (Sh218), coming as a relief to farmers who have had to cope with lower earnings in 2020.
  • Demand for tea in the overseas markets normally pick up during the winter owing to high rate of consumption.

Tea prices at the Mombasa auction are projected to rise in the fourth quarter on improved demand as winter sets in key markets.

The regulator, Tea Directorate, projects that the price of the commodity, which has for the better part of the year been at below $1 (109) a kilo, is expected to rise to $2 (Sh218), coming as a relief to farmers who have had to cope with lower earnings in 2020.

Demand for tea in the overseas markets normally pick up during the winter owing to high rate of consumption.

In the last financial period, growers had to content with reduced earnings occasioned by a decline in demand in the global market.

“Improved prices are projected in the fourth quarter of the year in anticipation of an increase in demand following the onset of winter in most of the market destination,” said the directorate.

The prices at the weekly auction have been on a downward trend in the last couple of sales in what has been attributed to low demand in the world markets, resulting from disruptions caused by Covid-19.

The low prices were also due to increased volumes as farmers supplied more tea to the factories following favourable weather during the period.

Smallholder farmers affiliated to the Kenya Tea Development Agency (KTDA) produced a record 373.8 million kilos of green leaf between July and October2020, the highest yield ever recorded within a period of four months in the agency’s history. The four-month production is 3.9 percent higher than 359.6 million kilos of green leaf recorded in the same period in 2019.

Managing director, KTDA Management Services Alfred Njagi attributed the increase in green leaf production to favourable weather conditions and good farming practices.

Tea exports to Kenya’s major markets dropped by 3.4 million kilos in seven months to July, compared with the same period last year as the commodity continued to face market restriction overseas.

A report from the directorate indicate that the volumes exported dropped to 289.1 million kilos in the review period, from 292.6 million in corresponding time last year. Most of the tea importing countries, which are Kenya’s major markets are still battling with the effects of the Coronavirus, slowing the purchases since March.