More than 115 million kilos of tea have piled up in Mombasa because the reserve price has been set at Sh314 per kg since 2021, above the world price which is now below Sh259. So the reserve price has to be reduced or scrapped altogether.
The alternative is for the government to start subsidising tea production, which obviously it cannot afford to do when its tax rises have just been scrapped.
Kenya Tea Development Agency factories account for 65 per cent of tea produced by smallholder farmers but independent factories which are not bound by the minimum price are now undercutting the KTDA.
The solution is not value addition. Most of this takes place in the country of sale through branding and marketing. Increased revenue from value addition is a mirage.
Part of the problem is the declining quality of Kenyan tea which the minimum price does not rectify since it guarantees a minimum price regardless of quality.
You cannot defeat the law of supply and demand. If the world price is down for an export crop, that is unavoidable. The minimum tea price should be scrapped entirely.
Quote of the day: “Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.”
James Baldwin
The American writer and civil rights activist was born on August 2, 1924
