Tea factories might be forced to process leaf and store the commodity in warehouses awaiting sale at the Mombasa auction should the situation worsen over the coronavirus.
To cushion farmers from a prolonged period of slow sales, factories will store processed tea, said Paul Ringera, a director at Githongo Tea Factory in Meru.
There are fears that even as the Mombasa auction was conducted this week, if lockdowns continue in Kenya’s tea markets abroad the value chain disruption is likely to trickle down to green leaf harvesting.
Kenya exports 95 percent of its tea to Egypt, United Kingdom, Pakistan, Iran and Afghanistan, which are currently facing serious disruptions resulting from lockdowns tied to the disease.
On Tuesday, tea prices at the Mombasa auction dropped to $1.87 (Sh193) from US$ 1.88 (Sh194) a kilo last week, according to a report by the East African Tea Trade Association (Eatta), which manages the biggest black tea auction in the world.
At least 3,505,271 kilos or 27 percent of tea presented for the auction was not sold. Out of 190,016 packages (12,540,000 kilos) available for sale, 137,234 (9,034,729 kilos) were sold. The volumes were 1,352,490 kilos less than last week’s sale.
“Pakistan Packers and Bazaar bought selectively while Afghanistan did not operate in this auction. Iran was subdued with strong interest from Somalia at the lower end of the market,” said Edward Mudibo, Eatta managing director.
Mr Ringera said should the situation worsen, tea will be processed and stored.
“We hope it does not get to that extent but if it does, we will process leaf and use every space available to store the commodity which is not highly perishable,” said Mr Ringera, who is also Kenya Tea Development Agency Zone Seven chairman.
“It is not clear how long this crisis will last but we will try to minimise the period farmers stay without harvesting. If tea it is not picked for long the bushes become unproductive with even more devastating effects on the sector,” Mr Ringera added.
KTDA operations director Alfred Njagi said although there were contingency measures to cushion the farmer, growers were likely to be hard hit in case the tea auction was disrupted.
“In the worst case scenario we will fill up our warehouses with processed tea and wait to see how the situation unfolds. We have never been in such a situation and it is unpredictable,” said Mr Njagi.
Speaking on phone Wednesday Mr Mudibo said there were plans of fast-tracking the online auction whose setup was currently in progress. “The data centre is being set up and we hope by May we will be up and running,” he said.