Tea Board appoints Willy Mutai as CEO amid auction price reform standoff

KENYA—The Tea Board of Kenya has recently announced the appointment of Willy Mutai as the new Chief Executive Officer, succeeding Peris Mudida, who has been serving in an acting capacity.

Mutai, a technical manager on the board and formerly a tea services assistant at KTDA, is slated to take over the organization on November 23rd, according to Jacob Kahiu, the board chair.

His appointment comes at a crucial time when the government has mandated minimum pricing at the Mombasa tea auction, resulting in a backlog of unsold consignment stock.

Additionally, due to increased productivity resulting from good rains, warehouses are overflowing with unsold consignment merchandise.

The industry estimates that 60% of the stocks sent to the weekly auction during the last six months remain unsold.

According to the Kenya Tea Growers Association (KTGA), the standoff is a result of the government setting a minimum price of US$2.43 (Sh370.43) per kilogramme of tea in 2022, established by the State through the Kenya Tea Development Agency (KTDA).

Buyers may be unwilling to buy at the minimum price established by the State, resulting in a significant amount of tea being unsold and having to be reproduced on future sale catalogues, as explained by KTGA chief executive officer Apollo Kiarii.

The Mombasa auction operates on a two-day per week schedule, with secondary-grade tea sold on Mondays and premium-grade tea auctioned on Tuesdays.

Therefore, any tea that does not sell on the scheduled auction day is reprinted on a new auction catalogue and reintroduced to the auction two weeks later. A vendor may only bring back unsold harvests to the auction twice.

Any crop unsold after two auction trials is relegated to a sale window referred to as a “passive window,” where produce fetches low pricing due to perceived poor quality.

Mr. Kiarii noted that with supply outstripping demand, there will always be a buyer preference to purchase fresh tea.

This leads to more unsold tea weekly, which means more reprints unsold several times, resulting in less cash to pay for inputs and farmers necessitating borrowing and interest payments.

According to the KTGA, this situation will have a severe impact on small-scale growers and producers, potentially causing them to go out of business and harming the economy of western Kenya’s tea-growing areas.

In response, the KTGA has encouraged the government to suspend minimum prices, at least for products grown in the west and Rift Valley, to improve the acquisition of enormous supplies stored in warehouses.

As a result, the KTGA proposes the removal of at least the west of the rift smallholder minimum pricing and the regulation of the shipment of all reprinted or unsold tea to Dubai to prevent Pakistan blenders from cashing in and exploiting the current situation of unsold stock.