Tea prices at the weekly Mombasa auction dropped for the fourth straight week on reduced demand, with the Russia-Ukraine war contributing.
This after hitting a four-year high in the first week of February when it fetched $2.62 (Sh298.44).
This week, a kilo fetched $2.46 (Sh280.22 ) which is a drop from last week’s $2.50 (Sh284.78 ) and $2.53 (Sh288.19) the previous week.
This is four cents shy of the $2.43 minimum price set by government last year.
According to the East African Tea Trade Association (EATTA), there was a decrease in volume sold by 365,165 kilos on reduced demand.
“There was a reduced demand for the 192,659 packages (12,692,040 kilos) for sale with 158,616 packages (10,506,978 Kilos) being sold with prices closely following quality. 17.67 per cent of packages remained unsold,” EATTA managing director Edward Mudibo said.
Pakistan showed reduced activity, EATTA notes, with Egyptian packers active at lower levels.
Yemen and other Middle Eastern countries-maintained inquiry while Sudan lent good but selective interest, it said.
“UK, Kazakhstan and other CIS nations showed less activity with Russia noticeably absent while Afghanistan and Iran were subdued. Local packers maintained activity based on price. Somalia was active at the lower end of the market,” Mudibo said.
The Russia-Ukraine war has disrupted markets according to industry players have said, a move likely to affect Kenyan exports beyond tea.
Kenya’s exports to Russia and Ukraine include tobacco and its substitutes, coffee, tea, mate and spices, live trees, plants, bulbs, roots, cut flowers, edible fruits, nuts, peel of citrus fruit and melons.
“These will be affected as traded goods and routes face more scrutiny in terms of security and logistics’ intermediation,” Kenya Association of Manufacturers CEO Phyllis Wakiaga told the Star.
Pakistan however remains Kenya’s biggest export market absorbing about 40 per cent of all teas from the country.
In 2020, Kenya earned about Sh25.9 billion of the total $589.8 million (Sh67.03 billion) worth of teas Pakistan imported from across the world.
Overall prices at the auction have however remained stable since mid-last year with the introduction of a reserve price, ensuring they don’t drop below the preferred two dollars a kilo.
The strong dollar against the shilling also comes to the farmers' advantage as the commodity is traded on the US currency.
It exchanged at 113.88 to a dollar yesterday.
The good average runs on the price means farmers, who are currently expecting bonuses, will earn more this year, with payment going up to at least Sh10 per kilogramme of delivered green leaf, from the Sh6 paid in half-year to June 2021.
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