Tea prices plunge to six-month low at auction
Friday June 24 2022
The price of tea at the Mombasa Auction declined significantly in this week’s trading to mark the lowest value to have been realised since January.
Data from the East African Tea Trade Association indicates that a kilo of the beverage dropped to $2.16 (Sh253.8) a kilo from $2.23 (Sh262) in the previous sale despite a decline in volumes.
Buyers have been attributing the low price to diminishing demand, especially for the expensive Kenya Tea Development Agency (KTDA) teas that have a set minimum price of $2.43 a kilo.
KTDA teas, which account for close to 80 percent of the total beverage sold at the auction, recorded a price of $2.62 a kilo on average with the best quality from the agency fetching $3.04.
The auction warned last week that the recent announcement by Pakistan-the top buyer of Kenyan tea, advising its citizens to cut the consumption of the beverage will have a negative impact on prices.
Eatta said should Pakistani buyers cut down on volumes, the prices at the weekly trading will decline significantly because of reduced demand.
“Pakistan holds 40 percent of the total tea traded at the auction. The impact of reduced uptake from them will be low prices of the commodity at the market,” said Edward Mudibo, managing director Eatta.
about 34 percent of the total teas that were offered for trading this week were withdrawn on the back of low prices.
The value of tea has for the last 18 weeks sold below the minimum price of $2.43 set by the government last year for all KTDA teas.
The continued decline is set to hit farmers as the current calendar year comes to an end this June before factories retreat to announce growers’ bonuses for the financial year 2021/2022.
Export earnings from tea grew by Sh16 billion or 13.3 percent last year, helped by higher volumes and a weaker shilling.
The Tea Board of Kenya (TBK) put the earnings at Sh136 billion last year when compared with Sh120 billion that was recorded in 2020.