Kenya abolishes minimum tea price at Mombasa Auction to boost global competitiveness
KENYA – Kenya has officially abolished the minimum price for its tea sold at the Mombasa Tea Auction, a move aimed at making Kenyan tea more globally competitive and enhancing export volumes.
The decision was made following consultations among stakeholders in the industry, according to East African Tea Trade Association (EATTA) Managing Director George Omuga.
The minimum price policy, set in 2021 at US$2.34 per kilo, was originally introduced to shield farmers from losses.
However, the regulation led to unintended consequences, including buyers avoiding Kenyan tea at the auction, causing a build-up of unsold stock.
In response, the industry has now reversed the decision, allowing the market to determine pricing.
With the abolition of the reserve price, EATTA urged all players in the tea value chain to uphold ethical pricing practices.
Omuga emphasized the need for transparency to ensure that tea is not sold at prices below production costs, protecting farmers from further financial strain.
Earlier, the Kenya Tea Development Agency (KTDA) announced plans to implement minimum quality standards for all Kenyan teas.
The KTDA’s National Chairman, Enos Njeru, noted that this initiative is designed to enhance the global appeal of Kenyan tea and increase export competitiveness.
Additionally, KTDA is working to diversify its product offerings, moving beyond bulk black CTC tea to cater to different market preferences, a strategy aimed at reducing the volume of unsold tea in warehouses.
To support value addition and reduce transportation costs for farmers, plans are underway to establish a common user facility in Nairobi’s Industrial Area.
This facility will facilitate the processing and packaging of tea products, improving the overall efficiency of the industry.
The Tea Board of Kenya (TBK) has also made efforts to address overstocking by reintroducing Direct Overseas Sales (DSO).
The reintroduction of DSO allows farmers to sell their produce directly from their respective factories, bypassing the traditional auction system. The government and KTDA are now working to revise the Tea Act to further streamline direct sales.
Kenya’s tea export earnings surged by 18 percent in the first half of 2024, reaching KES102.4 billion (US$793.8 million), driven by increased shipments to key markets such as Pakistan, Egypt, Britain, Russia, and Saudi Arabia.
As farmers await their bonus payments for the 1.41 billion kilograms of green leaf delivered to 54 tea factories, there is optimism that ongoing quality improvements will further boost the sector’s performance in the 2024/2025 financial year.
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