Price-shy tea traders pull record tonnage from auction

Tuesday December 28 2021
 East Africa Tea Trade Auction

Traders at the East Africa Tea Trade Auction in Mombasa on Kenya’s Coast. PHOTO FILE | NATION


Traders at the Mombasa Tea Auction withdrew 2.5 million kilogrammes of tea from the floor in the 50th sale as prices of the commodity continue to falter for the third consecutive week.

This is the highest amount of tea to be withdrawn as tea traders’ fortunes remain bleak with no hope of prices increasing any time soon.

According to 50th week Mombasa Tea Auction Market Report average price decreased to $2.39 compared with Sale 49 and 48 which traded at $2.44 and $2.49 respectively. In sale 50, the total volume of tea was 298,087 kg less than Sale 49.

Data from the East Africa Tea Traders Association (Eatta) indicates general demand prevailed for 11.7 million kilos available for sale, 9.1 million kilos were sold with 2.5 million kilos representing 23 percent of packages remaining unsold.

A decrease in prices has forced many traders to hoard tea to avoid more losses. Unscrupulous traders were blamed for interfering with the prices but the Eatta Secretariat has denied the allegations.

Eatta managing director Edward Mudibo linked the price decline to an increase in tea supplied to the market.


“We are witnessing a rise in volumes of tea at the auction and this oversupply is pushing down auction values despite a lengthy dry season. The market cannot absorb the minimum price set by the government of $2.86,” said Mudibo.

In July, Kenya’s Agriculture Cabinet Secretary Peter Munya said due to dipping prices, the government has set a minimum reserve price based on the cost of production, grade of the tea and for a reasonable return to the farmer.

As more traders withdraw their teas, this year Kenyan tea export earnings are expected to decline with a total of 483.3 million kilos sold as at the 50th sale this year compared with 516.8 million kilos same time last year.

In April, President Uhuru Kenyatta issued an Executive Order to control tea prices as after credible allegations were raised regarding potential price and auction manipulation, abuse of dominance and insider trading within the tea value chain, which caused a decline in farmers’ returns.

Mudibo said they suspect that traders from Tanzania, Rwanda and Uganda who held on to their teas during the period of strict Covid-19 containment measures and were now flooding the market.

Mr Mudibo said the Mombasa Tea Auction has remained the only market for East African countries as the Dar es Salam Tea Auction has failed to take off.

“We have continued to receive Tanzania tea after the ambitious plan of a few people to start the Dar es Salam Tea Auction failed. We are aware that the idea was mooted by a few people seeking to compete with the Mombasa Auction, but we remain competitive and continue to attract clients from across the region,” he added.

The Mombasa Tea Auction is the largest tea auction in the world with 75 percent of the volume of tea traded through the auction centre. Close to 32 percent of the tea exported to the world passes through Mombasa.