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Economy

Tea auction closes over pandemic

East African Tea Trade Association
A security guard at the East African Tea Trade Association screens a tea broke on March 17, 2020. PHOTO | LABAN WALLOGA | NMG 

Kenya’s sole tea auction Monday stopped operations over the government’s rule limiting mass gatherings, cutting 95 percent of the country’s tea supply to the export market and pointing to a hit on farmers’ earnings.

East Africa Tea Traders Association (Eatta) said the closure was a precautionary measure in the light of the coronavirus pandemic.

Health Cabinet Secretary Mutahi Kagwe on Sunday banned gatherings of more than 15 people to curb the spread of the virus.

“Further to our circular dated March 20, further developments have come to light in respect to the spread of the COVID 19 virus. It is in this regard that Eatta has taken a decision to postpone Auction-Sale 12, the Secondary auction of Monday, March 23 and the Primary auction of Tuesday, March 24,” said Edward Mudibo, the Eatta managing director.

The auction floor normally comprises brokers, buyers, and officials who add up to more than 50 people. The impact is likely to be felt by farmers as the move will create a glut in the market, making it difficult for factories to process and store tea supplies from growers. This will also affect farmers’ earnings. Farmers attached to Kenya Tea Development Agency (KTDA), which controls over 60 percent of the total tea market in the country, normally earn a monthly payment and a bonus paid at the end of every financial year.

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The price of tea has plummeted to the lowest level in the last one year with a kilo of the commodity trading as Sh185 on average in the latest sale held last week. Apollo Kiarii, the chief executive officer of Kenya Tea Growers Association said the closure of the auction is one of the worst hits on the sector in a long time. “We have been struggling to break even and we thought even with the coronavirus, the trade will continue and we would maintain our workforce, but this seems not to be the case,” said Mr Kiarii.

Mombasa is the second-largest tea trading auction in the world after Colombo but Kenya is the leading exporter of Black CTC globally.

Nairobi Coffee Exchange, another key trading auction has not closed but the officials say that they are in discussion with traders to see the way forward.

“We have not made the decision of closing the market but we are in discussion to see the steps that we shall take going forward,” said Daniel Mbithi, the coffee exchange chief executive officer.

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