Nairobi — Tea prices at the Mombasa auction rose by 27 percent to an average of USD2.91, the highest level this year during the auction held on November 15 and 16 on the back of the minimum reserve price regime introduced by the government.
In July, KTDA introduced a minimum reserve price of Sh268 (USD2.43) per kilo of processed tea in a move aimed at cushioning smallholder farmers who were affected by the deteriorating market that had seen selling prices nearly slip below the cost of production.
The Kenya Tea Development Authority(KTDA), in a statement, noted that between July and September, prices improved by 53 per cent from the average USD1.90 in the week before the introduction of the reserve price in July.
“The absorption rate has also normalized to 91 percent in the auction date under review up from 87 percent the previous week and the low of 8 percent in the first week after the introduction of the minimum reserve price,” the agency noted in a statement.
KTDA Holdings chairman David Ichoho said production during the same period had dipped 10 percent with factories putting out 77.4 million kilos of made tea in the four months compared to 86.1 million kilos for a similar period last year.
“We are encouraged by the improved prices at the auction, which means farmers are likely to earn significantly better returns this financial year,” Ichoho said.
He noted that factories are also working to manage the increasing cost of production through the use of more efficient machinery, the use of firewood from factory-owned plantations and through managing labour costs.
“We will continue to put in place measures to ensure farmers get the best possible prices for their tea. We urge factories and farmers to continue the focus on producing quality tea that is the ticket to fetching good prices” he added.