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Too much: Kenyan tea prices tumble on international markets

by Peter Mutai NAIROBI (Xinhua) -- Kenya’s tea is currently fetching low prices at the international market due to oversupply, an industry expert said on Friday.

Edward Mudibo, managing director of East African Tea Trade Association said that farmers have been producing large quantity of tea leaves that can hardly fetch good prices at the international market.

"Most farmers have embarked on rehabilitating aged and neglected bushes hence the increment of kilograms of tea," Mudibo told journalists in Nairobi.

He said that due to the prevailing low prices of tea, most producers are not able to manage production costs.

According to Mudibo, the trend is likely to lead to low returns to the multinational tea companies and the Kenya Tea Development Agency Holdings Ltd. that represents small scale producers.

He said that the demand for tea in Pakistan and Egypt where Kenya exports 40 percent and 15 percent of tea respectively has also been reduced due to economic challenges that the two countries are currently experiencing.

"The British market that is the third largest importer of Kenyan tea has also been unpredictable due to uncertainties associated with Brexit," said Mudibo.

He also revealed that the quality of Kenya’s tea has declined due to weak enforcement of regulations put in place by the government, leading to mushrooming of new tea factories and leaf hawking.

"The tea trade has been slow to adapt from marketing tea as a tradition- and culture-based products to marketing tea for its health and wellness benefits," said Mudibo.

He blamed the price decline on levying of value added tax on direct sales by local exporters and lack of adequate consumer-driven research and promotional activities.

Mudibo said that to ensure sustainability of the tea industry, there is need to encourage local tea consumption and enhance promotion in new and emerging markets.

In 2018, the Mombasa auction recorded sales of 458 million kilograms of Kenyan tea, making the amount the highest volume ever sold at the auction.

The volumes so far traded this year have maintained the same volumes as last year’s, meaning that 2019 will be another year of high auction volumes though prices remain low.



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