The price of tea edged up marginally during last week’s auction as the demand improved amidst rising supply.
The average price of tea at the Mombasa weekly auction went up by Sh2 to trade at Sh300 per kilogramme from Sh298 in the previous sale, even as the volume of the commodity increased.
The high demand at the auction led to increased rate of absorption that saw traders buy most of the teas offered, with only 15 per cent of the 7.9 million kilogrammes going unsold.
The volume rose to 6.5 million kilogrammes from 5.8 million kilogrammes in the previous exercise.
“There was improved demand for the 122,536 packages (7,966,285kg) offered for sale with a better absorption and only 15.15 per cent of teas remained unsold,” said Edward Mudibo, managing director at East Africa Tea Traders Association.
Tea prices had been falling for six consecutive auctions before picking up slightly in the last two sales as demand went up.
According to the Tea Brokers East Africa Limited, Afghanistan, Bazaar traders, Yemen and other Middle Eastern countries participated in the sale actively, raising the demand of the beverage.
The price of black tea in the market has been unstable in the past two years, prompting the Kenya Tea Development Agency (KTDA), which represents about 66,000 million small-scale holders, to diversify to specialty tea to grow revenue.
The move seeks to expand Kenya’s market share beyond the traditional markets of Egypt, Sudan, Pakistan and Afghanistan that are the major buyers of black tea.
Sri Lanka, Morocco and Middle East countries consume more orthodox tea, which fetches twice as much compared to black tea of which Kenya is the world’s leading exporter.
KTDA has set up new production lines for processing of orthodox tea in Meru, Kisii and Kirinyaga.