Tea Prices Fall with Increased Supply

The prices of tea at the Mombasa auction have dropped for a third time in a row as the amount of tea offered for sale grew by more than half a million kilograms for the last one week of auction with a kilogram of tea selling at 291 shillings from 300 shillings.

There has been a decline in the sale of tea prices at the auction with prices coming down by about ten shillings and this, according to Edward Mudibo, the managing director of East African Tea Traders Association is as a result of the increase in the quantities of tea supplied from 6.4 million kilograms to around 7 million kilograms last week.

When compared with the sales witnessed last year at the same period, however, the prices have significantly improved. This is because, last year at the same time, a kilogram of tea sold at 191 shillings and this year it is at 291 shillings.

Last year also, the prices of the beverage were low as a result of being hard hit by the wavering international market. This saw tea from Kenya registering a historical six year low of 1.90 shillings per kilogram of tea.

Early this year, the government of Kenya contracted Jomo Kenyatta University of Agriculture and Technology to fully undertake a study as well as developing a model that would guide the minimum price payable to smallholder farmers for the green leaf delivered. The institution was also to recommend a suitable model as well as suitable modalities for establishing price stabilization fund.

According to the ministry of agriculture, the developed report would be crucial in the process of identifying sustainable mechanisms that would cushion farmers against low earnings in times of oversupply of the beverage on the market. The government of Kenya also has been tirelessly been pushing for an increase in the local consumption of tea as a way of cushioning farmers against losses as a result of low international prices.

Currently, Kenya is the leading global exporter of black tea with 400 million kilograms of tea on the global market annually while only 25 kilograms of tea are consumed locally.