RISE

Hope for tea farmers as auction price pick to 2-dollar mark

The last time the commodity fetched a 2-dollar price average at the auction was in August last year.

In Summary

•This year's first sale, in January, saw the commodity fetch on average $1.94 (Sh212.62) per kilo.

•The commodity fetched an average $2 (Sh219.20) a kilo last week up from $1.97 (Sh215.91) the previous week, with auction managers expecting even better prices this week.

Workers pick tea leaves in Bomet county.
TEA PICKERS: Workers pick tea leaves in Bomet county.
Image: COURTESY:

Tea prices at the Mombasa weekly auction have hit the two-dollar mark for the first time this year, giving hope of better returns to farmers after low margins last year.

The commodity fetched an average $2 (Sh219.20) a kilo last week up from $1.97 (Sh215.91) the previous week, with auction managers expecting even better prices this week.

The last time the commodity fetched a 2-dollar price average at the auction was in August last year when it averaged $2.04 (Sh223.58).

This year's first sale, in January, saw the commodity fetch on average $1.94 (Sh212.62) per kilo, up from $1.87 (Sh204.95) at the close of last year's auction.

It has averaged $1.9 in the past seven auctions, between January and this month.

“Anything below two dollars is not good,” East African Tea Trade Association (EATTA) managing director Edward Mudibo told the Star during a telephone interview, expressing confidence the prices will get even better this year.

Some specific grades are however fetching better prices than the market average, he noted.

Last week’s price increase however came with a drop in total volumes traded, which were 775,425 kilos less than the previous week.

We are optimistic prices on average will be better than what we saw last year
East African Tea Trade Association (EATTA) managing director Edward Mudibo

Out of 186,623 packages (12,319,377 kilogrammes ) available for sale, 159,948 packages (10,538,114 kilogrammes ) were sold. 14.29 per cent packages remained unsold, EATTA notes in its weekly market report.

“Egyptian Packers lent strong support and were forceful while Sudan showed more and strong interest with an increased and strong enquiry from Kazakhstan and other CIS nations but were selective,” Mudibo said.

Pakistan Packers were active but at lower levels with UK, Yemen, other Middle Eastern countries and Russia active.

According to the market trend, there was reduced interest from Bazaar while Afghanistan was selective with Iran quieter. Local Packers showed more support on account of price. Somalia was more active at the lower end of the market.

Better prices mean higher earnings to tea farmers who last year contemplated low prices.

Average tea auction prices shed some six per cent last year compared to the previous year, as high production and a depressed market occasioned by Covid-19 affected demand.

It fetched an average $1.80 (Sh197.28) last year, down from

an average $2.05 in 2019,  with above the two-dollars a kilo being the preferred price mark.

A weaker shilling against the US Dollar however saved the farmers from a major dip in earnings last year.

In October last year, the 54 tea factory companies managed by the Kenya Tea Development Agency (KTDA) released Sh27.62 billion, being the final payment, popularly known as “bonus”, to tea farmers.

This was for the Financial Year ended June 30, 2020.

It took the total payment for the year to Sh51.85 billion up from Sh46.48 billion the previous year.

Prices this year will be highly driven by climatic conditions and demand in core markets of Pakistan which takes up 38 per cent of Kenya's tea exports, Egypt, the UK and Sudan, according to EATTA.

Over supply of the commodity, in case of favourable weather, will however affect prices in case of low demand.

“We are however optimistic prices on average will be better than what we saw last year,” Mudibo said.