Selling a surplus of 15 million kilos of tea is the challenge facing Kenya, which is seeing stocks accumulate. A colossal challenge, because the increase in tea production in the country has come at the expense of quality.
Tea stocks reached more than seven billion cups in October, according to agency calculations. Bloomberg. A challenge for the Kenya which must market these sheets as quickly as possible due to the lack of seeing their quality drop and their value with it.
For three years, the sale of Kenyan tea slowed down due to floor price established by the authorities – 2.34 dollars per kilo exported. A price which valued even the lowest qualities, which therefore did not find a buyer. In 2023, according to the Tea Board of Kenya, 40% of the tea offered at Mombasa auctions remained unsold. During a sale last July, this unsold rate even rose to 60%.
Overproduction that weighs on prices
Today the price obstacle is removed: the authorities finally gave in at the beginning of October in an attempt to absorb the surplus. This means that the qualities whose prices had been artificially inflated will find a more realistic value in the eyes of buyers who had shunned in recent months.
The objective set is to liquidate the overflow, but the measure will not be synonymous with rising prices on the contrary. The vice president of trading at Universal Commodities Trading, quoted by the Bloomberg agency, estimates that the increase in Kenyan production has already caused prices to fall globally by 10 to 30%.
The countries that sell their tea at the Mombasa auction can attest to this. This is the case of Uganda, which has sold most of its production at half price over the last two years. Which led at least 10 of the country’s 37 factories to close.
Better quality Kenyan tea tomorrow?
In the opinion of experts, the rise in prices will only come through the control of production at the largest tea exporter in the world, because the growth in volumes is not followed by that of demand which is increasing more slowly.
Kenya will also not spare work on the quality of its leaves if it wants to sell its tea better and promote it better outside the industrial groups which are its main customers. A wish expressed by the Kenyan president himself.
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