No respite as tea prices touch two-year low

The value of tea has touched a two-year low at the Mombasa auction as the trend of poor prices continues, signalling low earnings for farmers in the full financial year.

In the latest sale, a kilogramme of tea fetched Sh253, the price last recorded in the second week of January 2016.

There have been no clear cause for this fall but the Tea Directorate had earlier indicated that the prices were likely to drop because of increased volumes following favourable weather that has boosted production of green leaf.

“There is a likelihood that the prices will dip further because we expect the volumes at the auction to grow in the coming days,” said the directorate last week.

But a market report by the East African Tea Traders Association indicates the volumes offered for sale last week decreased by 33,812 kilogrammes, marking a third week in a row that quantities have declined.

READ: State mulls probe on ‘unusual’ tea auction price fall

The auction had started at a high of Sh270 in the first sale of the year but the prices have continued to fall in the last two months, with marginal improvement in some sales.

The directorate has indicated that it might conduct investigations into underlying factors affecting the value of the commodity.

For the last eight weeks, the price of tea has been declining at the Mombasa auction.

Tea production for the month of February was 27.93 million kilogrammes, against 22.60 million kilogrammes recorded during the corresponding month of 2017, according to the directorate.

The increase in production was largely attributed to recent rains experienced in the west of the Rift Valley that saw the region’s output rise from 12.23 million kilos to 18.65 million kilos.