The recently introduced price reserve has started bearing fruits, and the volume for smallholder tea factories managed by the Kenya Tea Development Agency reflect a positive response.
While introducing the reserve price, the KTDA board and the CS Ministry of Agriculture noted that tea prices have declined below production cost, negatively impacting the tea sector and, most importantly, the smallholder tea farmer.
In auction number 28, which took place on 12/07/2021, the volumes of tea sold by KTDA managed factories dropped by 89% compared to auction 27, attaining an absorption rate of 8% of offered teas, while the average price improved by 25% from 2.04USD/Kg to 2.57USD/KG for the specific gardens that sold, a growth of 0.52 USD (Kes. 56) per Kilogram.
In auction number 29, which took place last week, the absorption rate of offered teas improved to 19%, while the average price appreciated by 22% from 1.99 USD to 2.43USD/KG for the specific gardens that sold, a growth of 0.44 USD (Kes. 47) per Kilogram compared to auction 27 when the reserve price had not been introduced. Absorption in upcoming auctions is further expected to improve as the market aligns itself to the new prices.
Commenting on this new development, the Chairman of the KTDA board, Mr. David Ichoho, said that his board is focused and committed to ensuring that the smallholder tea farmer gets the best from their tea business despite the challenging market environment which has been marked by increased tea volumes and a depressed global market ravaged by COVID-19 Pandemic.
The Chairman added that the board is working with the government and other stakeholders, including tea buyers and brokers, to ensure the farmer gets the full benefit from the tea investment.
“The positive response from the market is an indication that we are on the right track, and I thank you the government for relentlessly dedicating its effort through tea reforms which are geared towards streamlining the sector,” the Chairman said.
At the same time, the Board Chairman said that KTDA had disbursed a mini bonus of KES 1.31 billion which will be paid together with the June green leaf monthly delivery.
The Chairman noted that his board is very thankful to the stakeholders who have supported the reforms in the tea sector.