Market News

Tea prices hit fresh low as year closes


Peter Kimanga, chairman of the East African Tea Traders Association. PHOTO | WILLIAM OERI | NMG

Tea prices have dropped to the lowest point this year with a kilogramme on average selling at Sh181 per kilo down from Sh190 last week.

The price at the Mombasa Auction, which had rebounded at the beginning of this month after a streak of poor performances, slid back to below two dollars in the last two sales of June.

This comes at a time when the financial year is coming to an end this month, implying farmers will have to contend with reduced earnings in the 2017/2018 financial year.

The prices have been so bad that last week the auction witnessed some teas selling for as low as $0.36 cents (Sh36) per kilogramme, leading to concern from stakeholders.

“A kilogramme of made tea comes from four kilos of green leaf meaning it will be Sh9 per kg of green leaf. If you subtract the manufacturing, transport and warehousing costs, one wonders what the farmer will take home,” said Peter Kimanga, chiarman of the East African Tea Traders Association (EATTA).

Mr Kimanga says increasing production and lack of expansion in the export markets is finally taking a toll on earnings, worsened further by the declining quality of Kenya teas.

“Kenya’s overreliance on a few bulk export markets will continue to distress the sector and urgent interventions need to be employed in order to broaden our market base as well as arrest the declining quality,” he said.

He said the government as a major beneficiary of the industry’s forex earnings should step in to reverse the trend.