Tea prices at the Mombasa auction continue to weaken on the back of low demand at the weekly trading.
The value of the beverage in the latest sale declined to $2.27 (Sh265.6) from $2.29 (Sh267) in the previous sale, to remain below the government-set reserve price of $2.43 a kilo, which largely applies to the Kenya Tea Development Agency (KTDA).
The KTDA teas account for over 70 percent of the total volumes traded at the auction and the lack of demand for this beverage has had a negative effect on the overall price of the tea at the auction, leading to high withdrawals.
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For instance, 30 percent of the total teas that were offered for trading at the auction in the latest sale were withdrawn by the sellers on account of lower prices. The minimum price has seen traders at the auction opt for cheaper teas from other regional countries, giving a wide berth to expensive Kenyan beverages because of the reserve price.
All the teas from regional countries are traded at the Mombasa auction by the East African Tea Traders Association before they are shipped out of the country to overseas markets.
The value of tea has for the last 16 weeks sold below the minimum price a move that will impact negatively farmers’ earnings at the end of this financial year.
The financial year for the tea farmers will be closing at the end of this month with the factories affiliated with KTDA expected to declare the second payment, popularly referred to as a bonus by October.
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 put the earnings at Sh136 billion last year against Sh120 billion in 2020.