In Summary:
- Kenya’s Tea Industry Faces Crisis: 40% of Auction Stocks Remain Unsold in 2023!
- High Reserve Prices and Poor Product Quality Plague the Market.
- Government Contemplates Repealing Regulations as Tea Sector Struggles with Unintended Consequences.
In a surprising turn of events for Kenya’s beloved tea industry, recent figures reveal a distressing reality: a whopping 40% of tea stocks remained unsold at the Mombasa auction in 2023! This revelation has sent ripples of concern through the tea-loving nation and beyond. Stepping into the heart of the matter, it’s clear that the struggle stems from a clash between quality and quantity. High reserve prices and dwindling product quality have emerged as the chief adversaries in this brewing battle.
At the forefront of this turmoil lies the Tea Board of Kenya (TBK), the guardian of Kenya’s tea heritage. Disclosures from TBK shed light on the plummeting absorption rates at the auction, plunging from a robust 76% in previous years to a concerning 60% in 2023. This downward spiral has hit hard, particularly for growers from the factories nestled in the western Rift Valley. But why the sudden decline? Well, it seems the culprit is an influx of teas that fall short in the quality department. The market is flooded with teas that fail to meet the discerning standards of buyers, leading to a downward spiral in prices.
The Kenya Tea Development Agency (KTDA), a key player in the auction, finds itself grappling with the fallout. The average auction price has taken a nosedive, falling to $2.24 per kilogram, well below the set reserve price of $2.43. Calls for the removal of this floor price echo through the industry corridors, as stakeholders clamor for a solution to stem the tide of unsold stocks. In response to the crisis, the government is contemplating a repeal of regulations introduced in 2021. These regulations, intended to boost earnings for smallholder farmers, have inadvertently led to unforeseen consequences. Talks are underway to pave the way for a return to price liberalization, providing a glimmer of hope amidst the storm. As Kenya’s tea sector grapples with these challenges, the future remains uncertain. But one thing is clear: the resilience and determination of tea growers and enthusiasts alike will undoubtedly see them through this turbulent time.
