State mulls probe on ‘unusual’ tea auction price fall

The Tea Directorate is considering carrying out investigations on whether there are underlying factors affecting the value of the commodity as prices of the beverage continue on a poor streak.

For the last six weeks, the price has been declining at the Mombasa auction, raising concern among the stakeholders and pointing to poor earnings by farmers this year.

Head of the directorate Samuel Ogola said though the price might have been affected by an increase in volume, there could be other factors.

“Basically there has been an increase in production and we think this is what has affected the price. However, we need to conduct investigation to find out if there are other underlying factors,” said Mr Ogola.

In the sale held last week, a kilogramme was on average sold at Sh260, down from Sh262 in the previous auction, representing a low of over one year.

Last week the volume offered declined by 212,786 kilos, but the drop did not affect the price, defying the law of supply and demand.

READ: Tea prices dip after rising at weekly auction

Tea production for the February was 27.93 million Kg, against 22.60 million Kg recorded during the corresponding month of 2017, according to the directorate.

The increase in production was largely attributed to rains in the West of Rift that saw the region’s output rise from 12.23 million Kg to 18.65 million kilos.

Kenya is the leading exporter of black CTC tea in the world accounting for about 24 per cent of the global exports.

The country exports the bulk of its tea to Egypt, UK, Pakistan, Afghanistan, Iran, Sudan, Yemen and UAE. 

The tea directorate is scouting for new markets to cut overreliance on the traditional ones.