Tea industry faces probe over price slump

The Government is considering launching investigations over sharp price decline for the last one year in the tea industry. 

Agriculture, Livestock and Fisheries Cabinet Secretary Felix Koskei said the concern is prompted by the more than 30 per cent decline since July 2013.

Government, Koskei said, wants to examine the entire tea value chain to find out the cause of the plummeting prices and come up with solutions to protect farmer from further agonies.

 “We are alarmed as a Government by the tumbling tea prices. We intend to conduct investigations in order to find out the drivers leading to this reduction. We will involve all the value chain players in the process and also find out what is happening to our competitors,” said Mr Koskei in a recent interview.  

Even though he did not indicate exactly when the exercise will start, the minister said the Government would involve Governors from various tea growing counties, tea brokerage firms, tea factory directors and farmers.

 “We are concerned with the falling prices at the Mombasa tea auction while demand in traditional consumer  markets like Pakistan, Egypt, and UK has not dropped. So we are asking ourselves what is the problem with our crop at Mombasa tea auction?” he added.

East Africa Tea Trade Association Managing Director Edward Mudibo shares the ministers’ sentiments, saying the industry stakeholders are equally concerned though optimistic the situation will correct itself soon.

 “We are concerned that the prices have continued to decline despite constant demand by buyers feeding various global market segments,” said Mr. Mudibo.

Kenya Tea Development Agency (KTDA) Chief Executive Lerionka Tiampati in an earlier in interview blamed the sharp price drop to a multiplicity of factors.

These ranged from increased supply occasioned by good weather conditions as well as economic and political instability in some of the key markets for Kenyan tea.

“This is a steep drop in prices compared to previous years. However, this is not a unique phenomenon. In 2008, tea prices dropped drastically from Sh208.98 ($2.43) to Sh146.20 ($1.70) and this affected farmers’ earnings,” Tiampati explained. Due to the current price decline 560,000 farmers affiliated to KTDA will not receive the initial (mini-bonus) payments and fears are that the final payment scheduled for late in the year will equally be affected by far.