Tea prices at the Mombasa auction held below the set minimum price as demand remains subdued at the weekly trading with the onset of summer in key export markets.
The price of the beverage in last week’s trading increased marginally to $2.29 (Sh268) from $2.23 (Sh261) in the previous sale, well below the government set reserve cost of $2.43 a kilo.
The minimum price which only applies to tea from Kenya Tea Development Agency (KTDA) has seen traders opt for cheaper options from other regional countries, giving a wide berth to expensive Kenyan beverages.
KTDA accounts for more than 70 per cent of the beverage traded at the auction.
Consequently, demand for the beverage in the world market has declined due to the onset of summer in major buying countries, reducing the consumption of the beverage forcing traders to go for cheaper commodities.
“The demand is now shifting towards cheaper beverages that is why non-Kenyan teas and plantations are now selling well compared with KTDA teas,” Peter Kimanga, a director with Global Teas.
The value of the commodity has sold below the minimum price for the last 14 weeks, which is expected to negatively impact farmers’ earnings at the end of this financial year.
Export earnings from the beverage in the 12-months to April 2022 rose to $1.22 billion (Sh142.4 billion) from $1.2 billion (Sh140 billion) in the corresponding period in 2021, Central Bank of Kenya data shows, helped by higher volumes and weaker shilling.