PERFORMANCE

Tea auction prices depressed below 2–dollar mark

This comes amid increased global production and oversupply.

In Summary

•The high supply of teas and exports by key global producing countries has affected the overall prices.

•Production of the green leaf in Kenya has also gone up.

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

Average tea prices at the weekly Mombasa auction have remained below the preferred 2-dollar mark for nine weeks running, amid increased global production of the commodity.

This week, the commodity averaged $1.83 (Sh195.22 ) a kilo at the auction which is one of the largest in the world where teas from Kenya, Uganda, Rwanda, Tanzania, Malawi, Ethiopia and the Democratic Republic of Congo are traded.

The price is a drop from last week's $1.85 (Sh197.36 ) even as volumes traded dropped.

Out of 187,943 packages (12,408,168.50 kilos)  available for sale, 157,019 packages (10,389,432 kilos) were sold.

15.97 per cent per cent packages remained unsold, the East African Tea Trade Association (EATTA) notes in its market report.

The commodity has only fetched a 2-dollar overall average once this year at the hammer which came in the second week of March, when a kilo sold for an average Sh213.36.

This year's lowest price so far came in the second week of April when a kilo fetched $1.81 (Sh193) .

This week's auction was marked with increased and strong inquiry from Egyptian packers with more support from Sudan while Yemen and other Middle Eastern countries lent more interest.

“UK increased activity but operated at lower levels with Kazakhstan, other CIS states and Russia active. Pakistan packers and Bazaar showed good interest but at lower rates with selective support from Afghanistan while Iran were more selective,”EATTA managing director Edward Mudibo notes in the report.

Local packers showed less interest on account of price. Somalia was active at the lower end of the market, EATTA says.

Last month, Kenya Tea Development Agency noted persistent high production and a global oversupply, which it said had pushed down the average tea prices for its managed factories.

The low prices so far signal low earnings for farmers, who last year were cushioned by a stronger dollar against the shillings as prices remained low.

Top 10 tea exporting countries are China, India, Kenya, Sri Lanka, Turkey, Indonesia, Vietnam, Japan, Iran and Argentina.

Last year, average tea auction prices fell by six per cent compared to the previous year, blamed on the high production and a depressed market occasioned by the pandemic.

2020's full-year average price was $1.80 (Sh192.02 ), which was lower compared to 2019, when it fetched an average $2.05 (Sh218.69) at the Mombasa auction.

The government is currently pushing for reforms in the sector, which it believes will improve farmers' earnings.