Tea prices at the Mombasa auction kicked off 2017 on a high note, nearly touching a one-year record during last week’s auction.
A market report by the East African Tea Traders Association (EATTA) indicates that a kilogramme of made tea fetched Sh268 on average in Tuesday’s trading compared with Sh260 in an earlier sale.
The volume traded last week though dropped by 667,483 tonnes in one of the largest volume declines in recent months as dry weather persisted.
“The average price increased to Sh268 when compared to last week’s Sh260,” says EATTA chief executive Edward Mudibo. In a similar period last year, the highest price at the auction was Sh273 per kilo of made tea.
Out of 140,405 packages (9,165,784 kilos) available for sale, 117,231 (7,636,285 kilos) were sold with 16.50 per cent going unsold.
The impressive performance gives farmers hope of earning a good bonus at the end of the financial year, if the trend continues.
The weatherman reported that the dry spell will persist to April. Drought normally cuts production and raises competition for tea and prices at the auction. Kenya Tea Development Authority (KTDA) had warned of low earnings this financial year.
Tea farmers affiliated to KTDA earned a record Sh84 billion in the last financial year helped by a stable exchange rate and high pricing of the commodity in the world market.
It was the second successive year of improved earnings.
The income was Sh21 billion more than the previous year when KTDA recorded sales of Sh63 billion.
The 2016 record earnings placed Kenya at position one globally in terms of payment to farmers, having paid the growers an average of Sh50 per kilogramme. It was followed by Sri-Lanka at Sh48.
In the 2015 ranking, Sri-Lanka was placed top having paid its farmers Sh49 per kilo compared to Kenya’s Sh41, placing the country in position two.
Kenya is the leading exporter of the commodity in the world, selling 95 per cent of its tea in the global market.
Kenya is exploring new markets and expanding the existing ones such as China, which has potential to buy more of the local tea.