Munya orders inquiry into Kenyan tea price plunge.
Agriculture Cabinet secretary Peter Munya is reading malice in the deteriorating value of the Kenyan tea at the weekly auction, disputing the official explanation of a glut in the market and low demand from overseas buyers.
The Mombasa Tea Auction and the multinational firms say the current lower tea prices have been occasioned by a sharp decline in demand from buyers, resulting in a glut.
However, Mr. Munya said the sharp price decline was unusual.
However, he did not specify who he suspects of interference, adding that the ministry is following up on the issue, especially with the Kenya Tea Development Agency that accounts for more than half of the total beverage at the auction.
He argued that there is no glut from the world’s major producers.
Tea prices last week touched a decade low in what is now worrying stakeholders in the sector. The value of the beverage has performed poorly in the past two months.
“Consumption of tea has gone down, and this low demand has resulted in poor prices that we are now witnessing at the market,” said Edward Mudibo, managing director of the East African Tea Traders Association (EATTA).
Apollo Kiarii, chief executive of the Kenya Tea Growers Association, an umbrella body for multinationals, echoed his sentiments.
He said the demand for the beverage had dropped due to lower uptake of tea, following the closure of restaurants in Europe in the wake of the Covid-19 pandemic.
“Traders have been withdrawing a lot of tea from the market because of poor prices leading to a buildup of glut, this, coupled with low demand has had negative effects on the value of the beverage,” he said.
Mr Kiarii said sellers are withdrawing the commodity from the auction because at the current prices are unable to recoup profit.
A market report from EATTA indicates the tea price declined to Sh178 last week, down from Sh181 in the previous sale.