This archive report was first published on 19 November 2021.
Nairobi, Kenya, November 18, 2021 - The Kenya Tea Development Authority (KTDA) has announced a significant increase in tea prices at the Mombasa auction, with prices rising by 27 percent to an average of USD2.91.
This is the highest level this year, and it comes on the back of the minimum reserve price regime introduced by the government in July. The regime aimed to cushion smallholder farmers who were affected by the deteriorating market that had seen selling prices nearly slip below the cost of production.
Between July and September, prices improved by 53 percent from the average USD1.90 in the week before the introduction of the reserve price. The absorption rate has also normalized to 91 percent in the auction date under review, up from 87 percent the previous week and the low of 8 percent in the first week after the introduction of the minimum reserve price.
KTDA Holdings chairman David Ichoho attributed the improved prices to the reserve price regime and increased demand. He noted that production during the same period had dipped 10 percent, with factories putting out 77.4 million kilos of made tea in the four months compared to 86.1 million kilos for a similar period last year.
“We are encouraged by the improved prices at the auction, which means farmers are likely to earn significantly better returns this financial year,” Ichoho said. He added that factories are working to manage the increasing cost of production through the use of more efficient machinery, the use of firewood from factory-owned plantations, and through managing labour costs.
