Kenya: Exporters Hold Tea to Beat Low Auction Prices

21 February 2019

High tea volumes have overwhelmed warehouses in Mombasa as low prices at the auction and high production on farms have left the stores full.

Chai Trading, a subsidiary of the Kenya Tea Development Agency has had its warehouses filled up in the last couple of months as a result of high output from farmers.

The firm's head of operations Muema Muindu said the warehouses, with the capacity of about 54 million kilos is now holding over 65 million kilogrammes.

"We have been getting more tea and at the moment the warehouses have been filled beyond the required capacity because of increased volumes," said Mr Muindu.

The congestion at the warehouse is resulting from decreased demand of the tea at the auction as a result of low prices at the weekly trading, as most sellers withhold their produce.

In the recent trading held this week, a kilo of tea fetched as low as Sh200 per kilo, the price that was witnessed four years ago. The same quantity attracted Sh280 in corresponding period last year.

The low prices have been occasioned by high volumes of the commodity at the auction. In sale six of this year, about 24 per cent of the total tea that had been offered for trading was not bought and it had to remain in the warehouse.

Chai Trading has been forced to store some of the tea packages along the aisle to ensure that all the consignment fits in the warehouse.

Tea is normally stored in the warehouse as it awaits to be exported after being sold at the auction, which takes place every week on Tuesday.

KTDA) has warned farmers to brace for long earnings this year following a decline of 17 per cent in price of the beverage in the first half of 2018/2019 financial year.

The average price of KTDA teas in the first half of the review period sharply dropped to Sh271 per kg from Sh327 for the corresponding first half of 2017/18 occasioned by high volumes.

Greenleaf production at the KTDA managed factories rose 4.4 per cent to 611 million kilos between July and December 2018 on account of good weather that spurred the volumes.

In the previous half of 2017/2018, the company realised 585 million kilos of green leaf delivered to their factories.

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