Traders at Kenya's Mombasa tea auction are avoiding KTDA tea due to a government-mandated minimum price of $2.43 (Sh283) per kilogram, leading to significant withdrawals of smallholder tea from the market.
Buyers are instead prioritizing cheaper teas from Uganda, Tanzania, and Burundi, which lack minimum pricing requirements. This shift has created a stark contrast in sales performance between Kenyan and regional teas at the auction.
"The demand is now shifting towards cheaper teas, which is why non-Kenyan teas and plantations are selling better compared to KTDA teas," said Peter Kimanga, director at Global Teas.
Kimanga attributed the trend to weakened currency values in key markets like Pakistan and Sudan, combined with reduced global tea consumption during the summer season. Regional teas traded through the East African Tea Traders Association face no price controls, further boosting their competitiveness.
Tea prices at the auction have remained below the $2.43 government floor for 13 consecutive weeks, despite its intention to protect farmers after previous price collapses. The Tea Board of Kenya reported Sh136 billion in tea exports in 2021, up from Sh120 billion in 2020, though current market conditions threaten this growth.
Recent sales saw prices drop to $2.23 (Sh260) per kilogram, with Sh1.1 billion worth of tea withdrawn in the latest trading session. Industry observers warn the trend could persist as global demand remains sluggish.
