Kenya government to stem fluctuating tea prices

Ministry of Agriculture Livestock and Fisheries Cabinet secretary Willy Bett. The Government has said that it will reduce levies and remove some licences in the tea sub-sector. (PHOTO: JENIPHER WACHIE/ STANDARD)

The Government has said that it will reduce levies and remove some licences in the tea sub-sector.

Agriculture Cabinet Secretary Willy Bett yesterday said this was meant to cushion farmers from price fluctuations at the Mombasa International Tea Auction.

Yesterday, figures from the East Africa Tea Trade Association, the entity that runs the auction, indicated that tea prices have hit a one-year low which was attributed to a supply glut. Last week, the country's main foreign-currency generator traded at an average of Sh102 ($2.11) compared to Sh271 ($2.66) in a similar period last year.

Traders said yesterday that the country's seven traditional buyers of tea had been "saturated" and asked the Government to remove excessive levies to encourage value-addition.

The State is concerned about price instability at the auction and the drop in the quality of Kenyan tea compared to tea from other countries that trade at the action.

Yesterday, Mr Bett said his ministry was in talks with the National Treasury in a bid to come up with measures to cushion the sector. Tea remains the country's biggest foreign exchange earner raking in $1.03 billion (about Sh104 billion) in 2015, according to the Kenya Bureau of Statistics.

"The prices have remained unstable and our main challenge is how we can stabilise them. The 2015 task force report is ready and we will make it public soon but we are also engaged with the National Treasury to see the levies and taxes that should be reduced or removed," said Bett.

According to Tea Brokers' Association Chairman Jacob Kahiu, tea prices at the auction have been on a free fall since January owing to surplus supplies which he said was in excess of 94 million kilos compared to a similar period last year.

"Consumption is not in tandem with production. We cannot tell farmers to reduce production but we need to start fishing for new markets and encouraging local consumption," said Mr Kahiu.

The country's tea growing zone experienced good rains and sunny days in January pushing up tea production even as demand remained constant.

Speaking when he visited the auction yesterday, Bett said the Government was planning to set up a common tea value-addition facility in Mombasa and to establish centres in tea-growing areas where farmers can monitor what is happening at the auction.