EAST AFRICA – Tea farmers in the East African countries; Kenya, Uganda, Tanzania, Rwanda, and Burundi have had low prices for their products due to overproduction in the world market, lack of bargaining power, and low levels of value-addition.
According to the market results of the auction held on January 3rd and 4th this year, Tanzania offered 820 packages of tea which are equivalent to 39,096 kilograms down from 1,260 packages which are equivalent to 65,980 kilograms it offered in January 2022.
In the first auction, which saw a total of 161,168 packages sold during the two auction days equivalent to 11,079, 287 kilograms, Kenya led the East African countries by offering a larger quantity of tea.
Out of the 175,160 packages of tea equivalent to 12,015, 526 kgs, Kenya managed to trade 124,058 packages equivalent to 8,826,572 kgs.
Uganda came second, selling 28,720 packages equivalent to 1,676,555 kgs, while Rwanda successfully sold a bunch of 7,310 packages, an equivalent of 497,620 Kgs, and Burundi came ahead of Tanzania, clinching the third and fourth positions, respectively.
The auction results further show that of the total 220,070 packages offered, 118,240 packages went unsold.
The auction results stated that on buyers’ appetite, Egyptian Packers showed more support, with Pakistan Packers, Bazaar, Afghanistan, Yemen, and other Middle Eastern countries are active but at lower levels.
Kazakhstan and other CIS states lent selective activity to the UK while Russia maintained participation at the auction. Sudan showed reduced inquiry, while Iran was quiet. Local Packers were less active, whereas Somalia maintained interest at the lower end of the market.
According to an opinion from the Star magazine, the Kenya Tea Development Agency (KTDA) tea reforms are causing more harm than good as shown by the recent results.
The opinion piece notes that KTDA-managed factories processed 53 percent of the national crop last year, which is a new low because farmers are diverting their crop to independent factories and multinationals as alluded to by Williamsons Ltd in their recent article.
A possible solution that was put in place through the so-called tea reforms of 2020 via an executive order was the introduction of a fixed minimum reserve price of $2.43 for a kilo of made tea for KTDA-managed factories.
Other changes introduced by the board include an increase in monthly pay to Kshs 20 per kilo for growers in regions five, six, and seven, and Kshs 21 for regions one to four.
It also encompasses the importation of fertilizer and the successful lobbying for a fertilizer subsidy from the State; and a reduction of interest rates charged by Greenland Fedha (KTDA’s microfinance institution) to 8% per annum to boost affordable credit access and reduce the burden of the loans for tea farmers.
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