Cargill Kenya Limited, the company that has been the top buyer at the Mombasa Tea Auction, is exiting the market, dealing a blow to farmers and traders as it now focuses on origination and trading of wheat, maize, barley, and soybean in the country.
The top players that are set to benefit from Cargill’s exit include Global Tea Commodities, Chai Trading Company, LAB International, James Finlay, and Mombasa Coffee, which together control half of the market.
Others include Devchand Keshavji, Aditya Birla Global Trading, MJ Clarke, Abbas Traders, and Van Rees among others. In total, there are currently 82 companies buying from the Mombasa Auction currently, including Cargill.
The multinational will retain about 119 employees.
The American company’s exit from the tea auction is set to impact at least 40 of its employees in Kenya, but will send shockwaves through the tea markets across the entire East African region.
The Mombasa Tea Auction is the largest in the region, and is where Kenya’s tea –the top export– is sold. It is also the primary market for tea from Uganda, Tanzania, Rwanda, and Burundi, and sometimes Mozambique and Ethiopia.
Without revealing the reason for the exit, a company spokesperson confirmed to Business Daily that it is leaving the Mombasa auction, after 40 years in the market and creating a mark in the Kenyan and wider East African tea industry.
“We can confirm Cargill has announced its decision to close its tea handling business in Mombasa, Kenya affecting 40 positions,” said the spokesperson. “We are working closely with impacted employees to ensure a smooth transition process.”
Cargill has been cutting back its purchases from the Mombasa Auction since last year, signalling difficulties in the market or a strategic shift in focus area, contributing to the exit.
Its exit from the market could exert a significant downward pressure on prices in the market, slashing the incomes of farmers who have been banking on the ongoing tea sector reforms in Kenya to boost earnings.
In the nine months to September, Cargill bought 22.6 million kilogrammes of tea from Mombasa, most of which was sourced from Kenya, accounting for 5.86 percent of the tea bought from the auction, making it the sixth largest buyer this year.
Last year, Cargill was the fourth top buyer of tea from Mombasa, having cut back its purchases by 44 percent from 68.7 million kg in 2022 to 38.7 million kg, which was only 7.9 percent of the auctioned tea. In 2022, it was the top buyer with 13.3 percent of the tea.
Before it started cutting back, it controlled about 15 percent to 20 percent of the market share at the Mombasa Tea Auction, and bought a total of about $180 million (Sh23 billion) worth of tea from the weekly sales every year.
With the exit from Mombasa, Cargill is now left with two business segments in Kenya – in Nairobi and Nakuru – it is involved in grain origination and trading of wheat, maize, barley, and soybean.
