The East Africa Tea Trade Association, the organization that runs the famed Mombasa tea auction has announced that it was postponing indefinitely the planned auction of regional teas, sending the industry into chaos.
With the suspension, 600,000 small-scale farmers and employees. of factories across the region will not be processing tea leaves unless those destined for alternative markets rather than the Mombasa auction.
The postponement comes amid reports that key buyers have failed to turn up for trade at the auction resulting in massive price drops.
“Further developments have come to light with respect to the spread of COVID-19 virus. It is due to this that the East African Tea Trade Association has taken the decision to postpone auction-12, the secondary auction of Monday 23rd and Primary auction of Tuesday 24th April,” noted a statement by Edward Mudibo, the Managing director of EATTA.
According to the figures from the auction, an average price continued with its downward spiral from Sh200 ($1.94) it sold in the last auction to Sh194 ($1.88) sold last week.
The Auctions are held weekly, on Mondays and Tuesdays. Presently there are offerings from Kenya, Uganda, Tanzania, Rwanda, Burundi, Democratic Republic of Congo, Malawi, Madagascar, Mozambique, and Ethiopia. Producers from as far as New Guinea and Indonesia have expressed their wish to join the Association and have their teas offered in the Mombasa auction. Mombasa is now the only auction center in the world trading in straight-line teas from more than one country.
The disruption by the tea auction is expected to have great repercussions across the regions with hundred of tea factories spread throughout the region. In Kenya, it is estimated that tea contributed Sh117 billion to the country’s GDP last year which will be greatly reduced this year. This will affect tea pickers, transporters, tea farmworkers and the entire chain to the warehouse and ship workers.
Pakistan was the leading export destination for Kenyan tea having imported 177.7 million kilograms, which accounted for 36 percent of the total export volume. Other key export destinations for Kenyan tea were Egypt with 99 million kilograms, the UK at 46 million kilograms, the United Arab Emirates buying 25 million kilograms, among others.
Emerging markets that recorded significantly higher tea imports from Kenya include Bangladesh, Nigeria, Ireland, Iran, India, Poland, Netherlands, Somalia, Turkey, Indonesia, Jordan, and Japan.
The sector is sensitive to regional and global occurrences with price fluctuations impacting the livelihoods of farmers in the country. Average tea prices at the Mombasa Tea Auction in July 2019 – January 2020 continued a downward trend, recording USD 2.21 compared to USD 2.58 in the corresponding period in 2018, a 14 percent drop. However, teas from KTDA-managed factories fetched an average USD 2.56 during the period under review compared to USD2.69 for a similar period in the previous year, a drop of 4.8 percent.
During the year 2019, a total of 497 million kilograms were exported which was 22 million kilograms higher than 474 million kilograms exported in 2018.
The East African Tea Trade Association is a voluntary organization bringing together Tea Producers, Buyers (Exporters), Brokers, Tea Packers and Warehouses, all working to promote the best interests of the Tea Trade in Africa.