Tea Prices Decline Marginally Amid Low Demand

By Jane Muia / Published August 5, 2022 | 1:05 pm

KEY POINTS

The low prices pushed traders to withdraw 3.6 million kilograms worth 438 million shillings from the auction, anticipating better prices in the next sale.

KEY TAKEAWAYS

Pakistan which is the top consumer of Kenya's tea has also cut the consumption of Kenya's tea citing financial uncertainties. According to industry data, Pakistan buys an average of up to 70 million kilograms of Kenyan tea annually.

Tea prices at the Mombasa auction have continued to record a lower price on the back of low demand from buyers in the world market. A kilogram of the beverage is now going for 261 shillings from the 264 shillings realized in the previous sale.

The low prices pushed traders to withdraw 3.6 million kilograms worth 438 million shillings from the auction, anticipating better prices in the next sale.

Since the return of the Russian traders to the market last month, the beverage has been fetching good prices in previous sales. However, in this week’s sale, no Russian trader was present hence the low prices.

The beverage prices at the auction have been dwindling in the last couple of months to July, owing to the low demand from key buyers.

Russia has been the 5th-largest consumer of Kenya’s tea after the United Arab Emirates, United Kingdom, Egypt, and Pakistan. The outbreak of the Russia-Ukraine war heavily affected exports of Kenya’s tea to the western nations, due to the blockage of shipping routes.

According to industry data, Russia bought 29.61 million kilos of tea worth 6.25 billion shillings last year from 25.14 million kilos valued at 5.02 billion shillings in 2020. The Tea Board of Kenya confirmed that there was a huge decline in Russia’s earnings in march, with the volumes sinking to 686,072 from 2.6 million kilos sold in a similar period last year.

Pakistan which is the top consumer of Kenya’s tea has also cut the consumption of Kenya’s tea citing financial uncertainties. According to industry data, Pakistan buys an average of up to 70 million kilograms of Kenyan tea annually.

Last year Kenya exported tea valued at $503 million to Pakistan. The decrease in demand may trigger increased prices of the commodity in the local markets, in farmers’ bid to tame losses.

Tea is among Kenya’s leading exports and has been hailed for earning the country high revenue alongside the horticulture sector. The sector is at risk of losing millions of money.