Kenya suspends minimum reserve price for tea amid stockpile concerns 

KENYA – Kenya has suspended the minimum reserve price for tea older than six months at the Mombasa weekly auction, effective immediately, to address the growing surplus of unsold tea stocks.  

The move, announced by Agriculture Cabinet Secretary Dr. Andrew Karanja, comes in response to concerns about the accumulation of unabsorbed tea caused by the existing pricing structure. 

Previously, the minimum reserve price was set at KES313.47 (US$2.43) per kilogram.  

This fixed price has been a significant factor in the surplus of unsold tea, prompting the government to adopt a more flexible pricing approach.  

“The reserve price should be flexible, not fixed, to prevent the current challenges,” Karanja stated. 

To address these issues, the government will establish a multi-stakeholder committee to review and revise the tea pricing mechanism.  

The committee will include representatives from the Ministry of Trade, Kenya Tea Development Agency (KTDA), the Tea Board of Kenya, and other key industry players. The group is expected to provide recommendations within a month. 

In addition to revising pricing, the Tea Board of Kenya will lead a quality improvement initiative aimed at enhancing the standard of Kenyan tea. This program will enforce a minimum quality standard, mandating that tea producers maintain at least 65 percent quality in their green leaf.  

“One reason for unsold tea is its poor quality. We will implement minimum quality standards to prevent substandard tea from being sold,” Karanja noted. 

The government also plans to amend the Tea Act 2020 to permit Direct Sales Overseas (DSOs) by all tea producers, including those managed by KTDA. This change aims to open new markets and streamline the sales process.  

Furthermore, KTDA will introduce a dedicated trading platform for orthodox and specialty teas at the auction, improving their visibility and marketability. 

In line with these efforts, the Tea Board of Kenya (TBK) plans to license more agents to expand the market for Kenyan tea.  

Despite a decrease in tea exports from 56.3 thousand metric tonnes to 51.6 thousand metric tonnes, export values dropped from KES17.3 billion (US$131.56M) to KES15.6 billion (US$118.63M).

However, the value of tea exports to Pakistan increased by 10.6 percent, reaching KES35.06 billion (US$271.86 million) between January and June 2024, boosting Pakistan’s share of Kenya’s tea export earnings from 38 percent to 40.6 percent. 

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