Tea glut hurts prices at Mombasa auction
An increase of tea production has pushed volumes beyond what the auction can absorb, resulting in low prices in the last couple of months.
The auction has a limit of eight million kilos a week but the volumes went up to 9.5 million kilos in the sale held last week.
The Tea Directorate now says it is because of the sharp increase in supply that the prices have been declining at the Mombasa auction.
“Eight million kilos of tea at the auction is the optimal absorption level that can be handled; anything more than that leads to a glut, which in turn affects the price,” says the Tea Directorate.
The price has plummeted to a near three-year low as the supply of green leaf triggered by good precipitation continues to stream in factories.
Last week, a kilo on average recorded a low of Sh247, marking the lowest price recorded this year, down from a high of Sh270 in January.
Tea production for 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. The region’s output rose from 12.23 million Kg to 18.65 million kilos.