Tea price drops for fifth week in a row on global glut

Tea prices at the Mombasa auction have declined for a fifth time in a row as the minimum price set by the government to address low earnings from the commodity fails to hold.

East African Tea Traders Association said prices declines to Sh246 in last week’s trading, down from Sh250 in the previous sale.

The price had rallied for two months after the introduction of the minimum price that buyers were supposed to pay for Kenya Tea Development Agency teas, peaking to a five year high of Sh256 before it started dipping again in the last five weeks.

The minimum price of $2.43 was introduced by the Ministry of Agriculture in August after the cost hit a decade low of Sh186.

The decline in value saw traders withdraw 19 percent of the total teas offered for sale from the trading floor this week.

The continuous decline on the price of tea may come as bad news to farmers who are yet to recover from the low bonus they earned this year.

According to the Tea Directorate, the decline in price has been caused by an increase of the commodity in the global market.

“We are witnessing a rise in volumes of tea at the auction and this is what is pushing down the value,” said the directorate.

The total volume traded in last week’s sale was 328,319 kilos more when compared with the previous auction.

Tea production in half year to June declined by 26 million kilogrammes when compared with corresponding period last year on the back of unfavourable weather.

Data from the directorate indicated that green leaf delivered to factory between January and June was 274 million kilogrammes when compared with 300 million kilogrammes that was realised in the same period in 2020.