Foreign exchange earnings will take a major hit if clients of multinationals shift to alternative markets owing to the current peak-season pickers’ strike, East African Tea Traders Association (Eatta) has warned.
Multinationals account for 40 per cent of the total tea traded at the weekly Mombasa auction. Brokers are now largely trading the commodity from regional markets and KTDA.
Tea export was the largest forex earner until 2015 when it was relegated to second by diaspora remittances.
“Some of the key markets will not be able to get tea of their choice and there is a likely scenario of them looking for an alternative market,” said Edward Mudibo, managing director Eatta.
The workers strike at the multinational tea firms in Kericho, Sotik and Nandi counties is now in its third week, subjecting companies to losses of over Sh300 million as of last week. The firms include James Finlay Tea, Eastern Produce and James Finlay.
Mr Mudibo said the labour unrest may lead to distortions in prices and availability of specified teas at the auction.
“The absence of the plantation teas limits the choice available to the buyers. It may also result in higher prices of teas offered in the short-term with the reverse taking place when the situation normalises,” he said. The standoff seems to be far from over as workers’ and plantations’ representatives maintain hardline stances.
Employers, through their umbrella body Kenya Tea Growers Association (KTGA) want the strike to be called off before they agree to a return-to-work formula. On the other hand the workers’ union wants the companies to honour wage rise before they report to work.
The two parties failed to reach an agreement on Friday marking the second time the talks to end the strike had collapsed.
Kenya Agriculture and Plantation Workers Union (KAPWU) won a case for a 30 per cent salary increase for members in court back in 2014.
The union says multinationals have since refused to honour the directive by the Labour Court and have frustrated talks on the matter.
It has threatened to call for a boycott of tea from the multinational companies over poor working conditions.