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Lower price of Kenyan tea leads to record withdrawal at weekly auction

by Lucinda Dordley
4 January 2022
in Agri News
Reading Time: 2 mins read
A A
In the 50th week, the the average price dropped to $2.39 from $2.44 and $2.49 in Sale 49 and 48. Photo: Supplied/FoodForAfrika.com

In the 50th week of the weekly auction, the average price of tea in Kenya dropped and caused record withdrawals. Photo: Supplied/FoodForAfrika.com

A total of 2.5 million kilograms of tea was withdrawn from the floor of the Mombasa Tea Auction recently, making it the biggest amount withdrawn across the 50 auctions thus far.

According to the 50th week Mombasa Tea Auction Market Report, the average price dropped from $2.44 and $2.49 in sale 49 and 48 respectively, to $2.39. The total amount of tea sold in sale 50 was 298 087 kg less than in sale 49.

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General demand prevailed for the 11.7 million kilos offered for sale, with 9.1 million kilos sold and 2.5 million kilos left unsold, accounting for 23% of packages, according to the East Africa Tea Traders Association (Eatta). Because of the drop in pricing, many dealers have been obliged to stockpile tea in order to avoid further losses. Unscrupulous traders were accused of tampering with the prices, but the Eatta secretariat denied this.

In July 2021, Kenya’s agriculture cabinet secretary Peter Munya announced that government had set a minimum reserve price based on the cost of production, tea grade, and a suitable return to the farmer owing to falling prices. Kenyan tea export revenues are anticipated to fall this year as more dealers withdraw their teas, with a total of 483.3 million kilos sold as of the 50th sale at the end of 2021, compared to 516.8 million kilos sold at the same time last year.

Still a top tea exporter

According to Statista, an international statistics collator, Kenya one of the world’s top tea exporters after China and Sri Lanka.

“A sunny climate and deep reddish soil make for perfect conditions to produce tea in the East African country. In all of Africa, Kenya is by far the main tea producer. Unsurprisingly, the commodity plays a key role in the Kenyan economy. Together with coffee, mate and spices, tea accounted for nearly one-quarter of the country’s exports in 2020,” the organisation said.

It also estimates that by the year 2025, the Kenyan tea market will be valued at over 2 billion U.S dollars.

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“In 2020, the Kenyan hot drinks market generated a revenue of over 1.5 billion U.S. dollars. Tea sales accounted for around 1.37 billion US dollars of this revenue. The Statista Consumer Market Outlook estimates that 2021 will see a significant increase in revenue of around 200 million US dollar and by 2025, revenue of the market will increase to over two billion US dollar.”

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Lucinda Dordley

Lucinda Dordley

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