Tea Prices Increase Despite Increase in Production

Tea auctioneers at the Mombasa auction have every reason to smile after the price of the beverage marginally increased during the last week’s trading. There were fears that because the volume of the commodity had drastically increased on the market, the prices would go down but this has not been the case as the popular tea beverage attained a two month high price.

As per the last week, a kilogram of tea went at an average of 293 shillings. This was an increase of three shillings from 290 shillings during the previous week’s auction. This comes even after the volumes of tea increased by a total of 589,301 kilograms to a total of 8.4 million kilograms from the previous 7.8 million kilograms.

The increase in prices of tea per kilogram at the auction comes as a sigh of relief especially after the commodity witnessed a series of losses in the last two consecutive months. The Kenya Tea Development Agency had recently warned that the persistent ongoing rains in the country especially in tea growing zones, are likely to negatively impact on the prices of tea this financial year.

Heavy rains, according to experts often result to glut that at the end leads to drastic fall in tea prices. Last year, that was the case when the price of tea recorded history by hitting the lowest price ever of 190 shillings per kilogram.

Last season, the earnings improved to 43.25 billion shillings. This was a representation of 21 percent. This came amid high global prices and the weaker shilling against the dollar. This was also a rebound from the previous season when an instant increase in tea production led to a drastic fall in tea prices by up to 30 percent. This increase also has been attributed to the decline in volumes of tea at Mombasa auction last season. This helped in increasing the demand for the commodity hence better prices.