Farmers’ Livelihood Threatened as Kenyan Tea Hits a 5-Year Low

Tea prices have hit a 5-year low at the Mombasa Tea Auction with a kilo retailing at 178.12 shillings, a price last recorded in 2017.

While the commodity has averaged 194.31 shillings so far since the beginning of the year, its oversupply is significantly threatening the prices.

The situation has been worsened by a global glut as top tea exporters are reeling from the effects of the Covid-19 pandemic.

According to the East African Tea Trade Association (EATTA), a price below 2 dollars, as per their estimation, is not good at all.

The highest price recorded this year is 215 shillings. This signals low earnings for farmers in the financial year ending June 30 and is expected to extend through the current financial year.

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The current price is a drop from last week’s 181.36 shillings, and 18.3 percent of the total kilos availed for sale (13.6 million kilos) remained unsold in the auction.

According to EATTA, of the 205,696 packages (13,615,051 kilos) available for sale, only 168,056 packages (11,149,127 kilos) were sold.

“The UK lent more support but operated at lower rates while Egyptian Packers, Pakistan Packers, Bazaar, Russia and Sudan were active but at lower levels with an increased but selective inquiry from Kazakhstan and other CIS states,” said EATTA MD, Edward Mudibo in a statement.

Yemen and other UAE countries showed less interest. Afghanistan portrayed selective activity while Iran remains subdued. Also, local packers showed less interest as Somalia lingered at the lower end of the market with little interest.

The Kenya Tea Development Agency (KTDA) also pointed out that the high production and a global oversupply have negatively affected the average tea prices across all its factories.

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“High volumes of tea produced in the East African region and elsewhere on the globe have contributed to the continued price decline in the global market,” KTDA stated in a statement.

In 2020, the average tea prices dropped 6 percent compared to 2019’s, an effect attributed to high production and a subdued market affected by the prevalence of the Covid-19 pandemic.

The full-year average for 2020 was 194.31 shillings, which was lower compared to 2019 when it fetched an average of 221.30 shillings at the Mombasa Tea Auction.

Currently, more than 620,000 small-scale farmers affiliated with KTDA expect a mini bonus in July, a payment that will be combined with the green leaf supply for June 2021.

The payment will range between 2 and 5 shillings per kilogram of green leaf delivered for six months between July 2020 and December 31, 2020.

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The Mombasa Tea Auction is one of the largest in the world where teas from Uganda, Rwanda, Tanzania, Malawi, Ethiopia, and the Democratic Republic of Congo are also traded.