East Africa: Without Auction, Tea Traders Left With $250m Hole

The region's tea sector stands to lose more than $250 million weekly occasioned by the suspension of the weekly Mombasa tea auction.

East Africa Tea Traders Association (EATTA) managing director Edward Mudibo said the decision was taken in response to the Covid-19 pandemic.

"EATTA has taken a decision to postpone auction-sale 12, the secondary auction of Monday, March 23 and the primary auction of Tuesday, March 24. The situation will remain the same until the corona infection is controlled," said Mr Mudibo.

Tea dealers have already expressed fears the situation might worsen, leading to losses due to warehouse charges, among other expenses.

"More than 95 per cent of tea traded in Mombasa tea auction is for export and it will affect not only Kenyan tea traders, but also other traders in Uganda, Rwanda, Tanzania, Malawi, Ethiopia and the DR Congo," said Shaahid Gulamhusein, a tea dealer.

Last week, Unilever Tea Kenya, one of the biggest buyers at the auction withdrew its participation citing international health measures affecting volumes of tea sold in the 11th sale.

More than 20 per cent of the volume of tea (764,777 kg) that was offered for sale at last week's auction was not sold due to uncertainty in the market attributed to coronavirus disease cases.

Response time

Kenya offered 372,158,988 kg of tea in 2019 with an average price of $2.24 per kilo followed by Uganda, which supplied 73,955,883 kg at $1.16 per kilo.

Rwanda tea fetched the highest average price at $3.05 per kilo, while Tanzania and Burundi teas were bought at $1.30 and $2.50 per kilogramme, respectively.

Cancellation of some of the ships ferrying tea has also been cited as some of the reasons behind the suspension of the auction.

Tea supports more than 600,000 livehoods ranging from farmers, brokers, warehouse owners from 10 countries in the region.

Mombasa tea auction is the second largest tea trading auction in the world after Colombia and it serves Uganda Tea Association, Rwanda Tea Association, Tea Association of Tanzania, Tea Association of Malawi and Burundi Tea Authority.

The top tea export markets include Egypt, Pakistan, the UK, Afghanistan and Sudan.

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