KENYA – In the latest sale at the Mombasa Tea Auction, the Kenya Tea Development Agency (KTDA) faced significant backlash as traders rejected over half of the tea offered for trading, amounting to a staggering 9.8 million kilograms.
This rejection came after KTDA instructed brokers to sell the beverage at a reserved price, resulting in a mismatch between price and quality that left traders dissatisfied.
The rejected tea, valued at Ksh2.3 billion, represented 52 percent of the total commodity offered at the auction floor.
KTDA’s directive to sell the tea at US$2.43, the government-set minimum price for smallholder farmers’ commodity was met with resistance from buyers who cited concerns over quality and pricing discrepancies.
“The previous week, KTDA had instructed brokers to sell the old teas at the best-offered bids. However, last week, they imposed reserved prices on old stocks, leading to significant withdrawals,” said a tea broker quoted by Business Day Africa.
This inconsistency led to widespread withdrawals from the auction, exacerbating the challenges faced by the tea industry.
KTDA’s decision to release aged tea stocks into the market at prices below the government-mandated minimum was intended to alleviate warehouse congestion and boost liquidity.
However, critics argue that anchoring the minimum price to production expenses rather than the intrinsic value of tea was imprudent, leading to further market disruptions.
Industry experts highlight the inherent disparities in quality between teas sourced from different regions, emphasizing the need for auction prices to reflect these differences.
The inflexibility of the minimum price regime has prompted buyers to favor alternative high-quality teas over KTDA offerings, contributing to the volume of unsold tea at the auction.
Meanwhile, directors of smallholder tea factories companies in Mt Kenya have raised concerns over the resurgence of cartels in the sector.
They allege that well-connected cartels are sabotaging government reforms aimed at revitalizing tea farming and ensuring growers receive fair compensation for their produce.
The directors claim that through reforms and proper management, farmers’ earnings have increased significantly, from Sh43 billion to about Sh80 billion.
However, they express dissatisfaction with the Tea Board of Kenya (TBK), accusing it of interfering with the affairs of KTDA-managed smallholder factories, which could adversely affect tea farmers.
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. HERE
