Tea price cap to hold despite tea withdrawal at the auction

Kenya’s tea export drops in January 2021

The government will not relent in its endeavor to enforce the minimum reserve prices for tea as it moves to stabilize and improve the price of tea for farmers.

This is despite massive withdrawal of tea from the auction over the last one week as buyers rejected smallholder teas estimated at about a billion shillings at the Mombasa tea auction.

Recent data by tea brokers’ indicates that 53 percent of the teas from Kenya Tea Development Authority (KTDA) was withdrawn from the auction floor during the weekly sale as buyers opted for teas that traded at less than Ksh.181 the minimum price set by Agriculture Cabinet Secretary Peter Munya.

Speaking on Monday during a meeting with the Independent Tea Producers Association (ITPA), CS Munya maintained the government has created enough storage to sustain tea withdrawn from the auction until the capped price holds for both teas sold through the auction or directly.

“We are working with KTDA to provide enough reserves to support the farmer. So no farmers’ obligation will be affected, “ said CS Munya when he addressed the press on the sidelines of a meeting with ITPA  in a Nairobi hotel.

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‘’I am happy to note that the independent tea producers, some of whom are processing green leaf from smallholder tea farmers, have come on board to support the setting of the minimum reserve price at the Auction. It is in view of this that we have come together today to speak in one voice and to deliberate on how we will execute this initiative for the collective benefit of tea producers,’’  he added.

The price cap introduced early this month seeks to ensure the farmers make a margin above the cost of production.

According to KTDA, in the days prior to the directive, the average cost of production for a kilo of green leaf stands at Ksh.183 despite the beverage fetching around Ksh.167 at the auction.

‘’We made a drastic but necessary decision with regard to sale of teas at the Mombasa tea auction while the new requirement may have slowed down the sale of teas at the Auction, players, particularly brokers and buyers will have to take the requisite steps to align their requirements and business transactions accordingly’’ added Munya.

The tea industry supports an estimated 650,000 farmers and over 6.5 Million people and earns the country over Ksh.120 billion annually.

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