Tea prices at the weekly auction have remained below the preferred 2-dollar mark, even as government moves in to control stocks with an aim of stabilizing prices.
A kilo averaged $1.88 (Sh204.17 ) at this week's auction.
This is however a higher price compared to last week when a kilo traded at $1.58(Sh 171.59).
Volumes traded this week were also higher by 2.8 million kilos compared to last week.
According to the East African Tea Trade Association (EATTA), there was an improved demand with better absorption of the 163,760 packages (10,756,518 kilos) available for sale.
135,260 packages (8,803,342 Kilos) were sold with 17.4 per cent packages remaining unsold.
“Egyptian Packers, Kazakhstan and other CIS nations showed good activity while Pakistan Packers, Bazaar, UK, Yemen, other Middle Eastern counties, Russia and Sudan reduced support,” EATTA notes in its weekly market report.
Afghanistan and Iran were quiet while Local Packers were less active in line with price. Somalia showed more interest at the lower end of the market, the association notes.
Kenya Tea Development Agency (KTDA) however says its managed factories sold at better prices with 87 per cent of all teas offered at the auction being taken.
This is up from 19 per cent sold the previous week as the recently introduced minimum reserve price starts to bear fruit.
The teas were sold at an average of $2.29 (Sh 248.69)per kilogramme, compared to $2.00 the same week in last year’s auction, and $1.90 (Sh206.34) three weeks prior to introduction of the minimum reserve price.
KTDA introduced a minimum reserve price of $2.43 (Sh263.9 ) per kilo of made tea on July 10, causing a decline in absorption at the auction as the market adjusted to the new guidelines.
Anything below two dollar is considered not good with farmers' earnings being affected by the low prices.
“We are encouraged by the improved tea uptake at the auction, and this is a reflection that our buyers appreciate the need for sustainable tea farming,” said Wilson Muthaura, acting KTDA Holdings CEO.
Tea prices at the auction have been on a downward trend since 2018, threatening to push farmers to losses as low selling prices cannot cover production costs.
Besides the minimum price at the market, KTDA expects factories to reduce their production costs per kilo of made tea.
The factories will also be expected to consistently produce high quality tea that fetches good prices in the market.
