Tea traders contemplate shifting to Naivasha as a new holding and packaging zone for consignments of the commodity, citing the high cost of doing business and multiple non-tariff barriers in Mombasa County, as well as the transport to the coastal city, which currently hosts these key pre-export operations, including the weekly auction.
The traders now mull investing in Naivasha as a new tea holding and packaging zone before ferrying consignments of the beverage by railway to the Mombasa port to bypass cess fees charged by different counties along the Northern Corridor.
Traders said that the introduction of online tea auctions about three years ago has lowered the need for a physical market presence in Mombasa, especially considering the increasing cost of doing business in the Coastal city.
“Mombasa has an advantage since such business is viable if done next to the port, but we have the option of doing it in Naivasha and transporting our teas using the Standard Gauge Railway (SGR) if Mombasa County does not reconsider the Sh7,000 per truck. Mombasa has proved to be expensive in doing business,” Peter Kimanga, a trader based in Mombasa, said.
Willy Mutai, the chief executive officer of the Tea Board of Kenya (TBK), said that cess charges by counties have made business along the corridor more expensive, eating away the little profits farmers get.
“Several counties have turned national highways into toll points, imposing several levies disguised as entry fees, parking charges, branding and advertising fees that have increased the cost of transport,” he said.
Kenya produces black tea mainly for export to the Middle East and Europe, with key destinations being Pakistan, Egypt, Britain, and Afghanistan.
“Every year, more than 400,000 trucks come from Mombasa to ferry tea to different tea markets abroad; thus, the county government is turning the highway into a cash cow despite the roads being built and maintained by the national government,” Mr Mutai added.
On major highways, counties have erected barriers and are charging exorbitant fees on trucks transporting goods from one part of the country to another.
Kenya’s tea production dropped 15.2 percent in the first four months of this year to 188.68 million kilogrammes, from 222.6 million kilogrammes in a similar period of last year, hurt by reduced rainfall in key growing zones.
TBK data further indicated that the dip in the produced volumes resulted in a 17.7 percent drop in auction sales volumes to 137.8 million kilogrammes, down from the 167.5 million kilogrammes recorded in the four months to April 2024.
Tea production opened the year on a high of 54.4 million kilogrammes in January, but dropped to 44.6 million kilogrammes in February and further to 37.9 million kilogrammes in March, before rising to 51.8 million kilogrammes in April.
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