Traders withdraw Sh1.5bn tea after auction price falls


A worker picking tea. FILE PHOTO | NMG

The value of tea at the Mombasa auction dropped to retail below the government-set minimum price, leading to a withdrawal of Sh1.5 billion worth of the beverage at the market.

Data from the East Africa Tea Trade Association indicates that the price of the beverage declined to $2.34 (Sh285) in the latest sale down from $2.45 (Sh298) in the previous sale.

This latest withdrawal, which stood at 37 percent of the volumes supplied, marks the highest numbers to have been taken out of the trading floor since the beginning of the year.

The Ministry of Agriculture set $2.43 (Sh296) as the minimum price for a kilo of tea for all the Kenya Tea Development Agency teas last year.

This is the second time in 11 weeks that the price of tea at the auction has dipped after months of good performances.

The volumes of tea offered at the auction during the sale declined by 465,000 kilogrammes to continue on a downward trend for the last month.

The rising prices in the last eight weeks had given farmers hopes of good earnings in the current financial year as it had reversed a trend of low prices witnessed between June and August.

Economic woes

The lower prices were attributed to a decline in demand from buyers owing to the economic woes in Pakistan and the Russia-Ukraine war that resulted in logistical challenges.

The Russia-Ukrainian war cut the tea demand to the world market as it disrupted the supply chain.

Pakistan is a key buyer of Kenyan tea, accounting for nearly 40 percent of the total exports with the economic turmoil resulting in low uptake of the beverage by this Asian nation.

In June, the Pakistani government urged its citizens to cut the volume of tea that they consume and moved ahead to limit the amount of money that importers could access from the banks to curb expensive imports in the wake of a weakening rupee.

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