Kenya will lose billions of shillings every week from tea if the auction in Mombasa is affected by the insecurity in the tea estates in Kericho, Nandi and Bomet counties.
The board of the East Africa Tea Trade Auction, which runs the Mombasa Tea Auction, said the invasion of tea estates in the Kenyan highlands will have huge ramifications on the economy.
Tea from 19 counties in Kenya accounts for 40 per cent of the volume of tea traded at the Mombasa Tea Auction, which gets its product from at least 12 African nations including; Kenya, Uganda, Tanzania, Rwanda, Burundi, DRC, Malawi, Mozambique, Madagascar and Ethiopia.
On Wednesday, Ekaterra Tea PLC, formerly Unilever announced the suspension of its operations in Bomet and Kericho counties following the invasion and destruction of its property by the locals.
The company said the recent protests and looting by suspected criminal groups at their tea estates in Kericho and Bomet counties have led to over Sh120 million in losses.
Due to the heightened insecurity, large tea producers operating in Kericho, Bomet, Nyamira and Nandi counties have also threatened to scale down their operations.
EATTA board chairperson Arthur Sewe said Kenya is on the verge of losing Sh2 billion every week if all the tea plantations are shut down and the Mombasa Tea Auction operations are halted.
“It is important to note that tea plantations in this country account for 40 per cent of the volume traded in the Mombasa auction. If they (plantations) stop presenting their tea in the auction, we foresee a catastrophic impact on the Mombasa Tea Auction,” Sewe said.
Last year, Kenya earned more than Sh130 billion from tea exported through the Mombasa Tea Auction.
Sewe appealed to the Kenyan government to intervene and resolve the problem.
He said the invasions are being encouraged by companies that are still buying tea that has been plucked illegally by the invaders.
“The invaders are plucking the green leaf in broad daylight. These people are not cooking the green leaf nor taking it to their homes. This means, there could be some factories that are buying from them,” he said.
He added, “If these factories stop from buying the illegally plucked green leaf, I do not think these invasions will continue.”
EATTA has already issued a circular to its members to stop buying tea from suspected invaders, lest they are deregistered from the association.
“We have already sent out a circular, if any of our members who are running those tea factories are found absolving the stolen leaf, will be dismissed or deregistered and they will not be allowed to trade through this auction,” he said.
EATTA chief executive officer Florence Owino said what is happening in Bomet and Kericho counties will have huge consequences on the Kenyan economy.
“Shutting operations will have huge ramifications on the economy and the tea auction in Mombasa. Ekaterra has other plantations in Tanzania, therefore, if investor shuts down in Kenya, they will look to expand investment in Tanzania,” she said.
She said there is also the danger of the emergence of other tea auctions in the region.
“The government has to assure these investors of their security to ensure they can resume their operations,” she said.
Other ETTA directors Benjamin Gitonga and Samuel Karima said the quantity and the quality of Kenyan tea will be affected if the situation is not addressed.
“The Mombasa auction trades every week on Monday, Tuesday and Wednesday. We trade over Sh2 billion per week and the net effect if we stop operations for a week will be a loss of over Sh2 billion,” Karima said.
They were speaking during a press briefing at EATTA offices in Mombasa.