By Benson Kathuri

Local tea producers and packers have failed to penetrate the European export market due to stiff competition by multinational companies and lack of money for marketing.

Tea Board of Kenya (TBK) said the multinationals that include Unilever and Finlays, however, are the biggest buyers of local and regional teas at the Mombasa tea auction.

TBK Managing Director Sicily Kariuki said sale of bulk tea at the auction denied farmers billions of shillings as prices remained low and unpredictable. The buyers use the high quality teas to blend with other poor quality but fail to acknowledge its origin.

"This scenario is risky to local tea. We call for diversification towards value addition," said Kariuki during a press briefing in Nairobi on Monday.

Sources said the two buyers have ignored pleas from industry players who want value addition facilities started in Mombasa to create linkages in the multibillion-shilling industry.

However, auction prices have improved in the last eight months due to long dry spells, which have affected tea supply across the globe.

"For the period up to August, the average tea auction prices stood at $2.56 per kilogramme compared to $ 2.42 recorded during the same period of last year," Kariuki said.

Kariuki said the prices recorded this year are the highest the industry has achieved in about 25 years.

However, production is likely to remain low due to on-going drought.

TBK says tea production for the period January to August stood at 182.0 million kilogrammes, or 11.6 per cent lower compared to 206.1 million kilogrammes recorded over the same period last year.