Tea Sector Drop in First Auction of 2016

As the year 2015 came to an end, one thing in the agricultural sector was clear; the tea sector was bringing in a lot of profits.

The year 2016, however, has begun on the negative side with the tea prices during the first auction recording a negative deviation of five percent.

Before the end of last year, a kilogram of tea at the auction market was 274 shillings but during the first auction this year, the price came down to 278 shillings per kilogram.

Not only did the tea register low prices during the first week of the auctioning but also registered a drop in the volume of tea on the market. As at December last year, the highest volume during the last week of trade was 9.1 million kilograms and the volume during the first week of trade this year is 7.7 million kilograms. This is a reduction of 1.4 million kilograms.

Last year’s increase in the volumes of tea at the action market was attributed to the onset of the El Nino rains. Although many people expected the prices to drop during that period as a result of the increased supply, things were opposite as the prices increased.

The El-Nino rains are now almost coming to an end and the dry seasons are fast coming in and economic analysts have projected a sharp reduction of tea in the factories and this may either increase the prices of tea, reduce the quality of tea or force those who import tea from Kenya to look to other markets for large volumes.

Data at the Kenya National Bureau of Statistics indicate that tea decreased ion volume from 338,943 tonnes to 301,330 tonnes during the quarter three of the report and this was attributed to the harsh climatic conditions and the volumes are expected to drop further with the onset of the dry season.

Article by Juma Fred.