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Tea Prices Close The Year Below The Minimum Price Amid Reduced Demand

BY Jane Muia · December 27, 2022 12:12 pm

KEY POINTS

The Ministry of Agriculture set USD2.43 (294 shillings) as the minimum price for a kilo of tea for all the Kenya Tea Development Agency (KTDA) teas last year in a move that was geared towards protecting farmers’ earnings. KTDA accounts for at least 85 percent of the total tea that is sold through the Mombasa auction.

KEY TAKEAWAYS

 “In this last sale of the year, there was good general demand at irregularly easier levels for the 232,540 packages (15,496,597.00 kilos) available for sale. Some 160,820 packages (10,653,517.00 Kilos) were sold with 30.84 percent of the packages remaining unsold.”

Tea prices at the weekly Mombasa auction closed the year below the government-set minimum price amid reduced demand from key buyers.

Data from the East African Tea Trade Association (EATTA) shows a kilo of the beverage traded at USD2.22(273.84 shillings) down from USD2.32(286.17 shillings) in the previous week.

“In this last sale of the year, there was good general demand at irregularly easier levels for the 232,540 packages (15,496,597.00 kilos) available for sale. Some 160,820 packages (10,653,517.00 Kilos) were sold with 30.84 percent of the packages remaining unsold,” said EATTA managing director Edward Mudibo.

In the week, Pakistan Packers, Bazaar, and Afghanistan showed good support but at lower levels with a useful inquiry from Yemen and other Middle Eastern countries. Kazakhstan, other CIS states, and Sudan were active but selective while the UK maintained interest.

The Ministry of Agriculture set USD2.43 (294 shillings) as the minimum price for a kilo of tea for all the Kenya Tea Development Agency (KTDA) teas last year in a move that was geared towards protecting farmers’ earnings. KTDA accounts for at least 85 percent of the total tea that is sold through the Mombasa auction.

Low demand from key buyers such as Pakistan and Russia has seen the commodity’s price dwindle at the auction.

Pakistan is the top buyer of Kenya’s tea taking up around 38 percent of the total weekly sales at the Mombasa Tea Auction. The country buys an average of up to 70 million kilograms of Kenyan tea annually.

Pakistan has since June cut its tea consumption citing financial uncertainties. The country’s foreign exchange reserves dropped from around $16 billion (1.9 trillion shillings) in February, to less than $10 billion (1.2 trillion shillings) in the first week of June. The South Asian country has also witnessed extreme weather conditions since the start of the year.

Despite the prevailing low demand, this year Kenyan tea has managed to remain above two dollars per kilo as compared to last year when the prices ranged between $1.80 (215.28 shillings) and $1.90 (227.24 shillings).

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