Tea prices at the Mombasa auction remain depressed at 13 per cent below the first sale of 2018. A kilo on average fetched Sh236 in sale 27 this week, down from Sh271 in the first auction of the year.
“We are looking at the dynamics leading to the low price of tea at the auction and we should be able to come up with an answer in the next few days,” said Anthony Muriithi, head of Tea Directorate.
In this week’s trading, the prices rallied from Sh231 per kilo the previous week to Sh236, reversing the falling trend witnessed in the last five auctions.
East African Tea Traders Association (Eatta), which manages the auction, says the price of the commodity is expected to improve on account of low supply. “We expect the price to pick in the coming days as the shortage of tea resulting from cold weather is likely to push up the cost,” said managing director Edward Mudibo.
The volume offered for sale this week dropped by over half a million kilos from 9.7 million to 9.25 million in Tuesday trading.
Poor prices witnessed in the financial year ended June point to low earnings for farmers in second payment that is normally paid toward the end of the calendar year.
Growers affiliated to Kenya Tea Development Agency earned Sh42 billion as the second payment last year. This was lower by Sh2 billion than a record high of Sh44 billion they earned in 2016.
The bulk of the tea from small-scale farmers is sold at the Mombasa auction before it is exported overseas to Egypt, the UK, Pakistan, Afghanistan, Iran, Sudan, Yemen and the United Arab Emirates.