KENYA – In a statement, the Tea Board of Kenya has revealed that approximately 40 percent of tea offered at the Mombasa auction remained unsold in 2023, a significant increase attributed to high reserve prices and diminished product quality.
TBK revealed a decline in the absorption rate, averaging 60 percent, compared to 76 percent in 2022 and 84 percent in 2021.
The most affected were growers from factories in the west of the Rift Valley, witnessing the highest volumes of unsold teas. Moreover, the Broken Pokoe 1 (BP1) grade teas across all factories faced reduced sales due to a decline in their penetration of key markets, including Russia and Iran.
The average auction price for sold tea in 2023 also experienced a dip, falling to US$2.24 per kilogram from US$2.49 in 2022. This decrease disrupted the reserve price of US$2.43 set for teas sold by the Kenya Tea Development Agency (KTDA), the largest participant in the auction.
“The lower absorption and reduced prices were attributable to the increased volume of lower quality teas offered by the tea factories at the auction,” stated TBK.
Despite the challenges, smallholder tea factories delivering good to best quality were spared from the fallout, fetching higher prices averaging US$2.73 per kilogram for the main grades.
Concerns about the drop in tea prices against higher reserve prices have prompted calls for the removal of the floor price.
Last month, Kenya’s Investments Promotion PS Abubakar Hassan Abubakar announced government plans to engage tea sector players in talks to repeal regulations introducing the reserve price.
Abubakar noted, “We are now going to have a conversation on how we will liberalize that.”
To address the supply of lower quality teas, TBK is working on developing standards for acceptable processing.
“The Tea Board of Kenya has been registering the green leaf transporters to the factory and is developing the standards of green leaf acceptable for processing,” the TBK stated.
Despite the auction challenges, the tea sector recorded record earnings of Kes180.5 billion (US$1.25B) in 2023, a 31 percent increase in export value.
Pakistan remained the top export market for Kenyan tea, purchasing green leaf valued at Kes75.2 billion (US$522.19M) or 209.59 million kilograms, overcoming difficulties in obtaining hard currency for purchases.
Other significant markets included Egypt, the UK, UAE, Yemen, Russia, Iran, Sudan, Afghanistan, and Poland, accounting for 83.1 percent of the country’s tea export volume.
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