Government suspends reserve price on tea

The Mountain Journal

The Tea Board of Kenya (TBK) has ordered the immediate suspension of the tea reserve imposed two years ago, a move designed to end congestion of unsold tea in the Mombasa warehouses.

 The removal of the reserved price  followed a deliberation by the tea market players and the agriculture Cabinet Secretary Dr Andrew Karanja in August following accumulation of unsold tea estimated at 100 million kilogrammes in the warehouses.

On Tuesday,  tea brokers, tea buyers and tea producers associations  were advised by the East African Tea Trade Association (EATTA) Managing Director Edward Omuga that the regulator had suspended the reserve price with immediate effect.

The directive issued by TBK CEO Willy Mutai in a circular dated October 4,  directed the tea producers to observe good agricultural and manufacturer procedures to ensure the quality of all tea offered for sale to meet the required requirements.

 Two years ago the government fixed a reserve price of Sh243 per kilogramme of tea at the Mombasa auction, a move that the players in the market questioned and blamed it on congestion of unsold produce.

“All tea destined to the market through the direct sale Overseas (DSOs) window is sold at a price above prevailing in the auction market. 

Mutai also demanded transparency in the transaction(s) in the market and observation of ethics  tea trading practices to ensure that the teas are not sold at prices that are below the production costs,” read part of the circular.

The official observed that the  buyers  should offer prices that give a reasonable return to the tea farmers.

 A tea value chain expert Peter Karomo said the suspension of the minimum price is designed to allow trading flexibility and hopefully give buyers the opportunity to clear the stocks from the second-largest black tea auction in the world. 

“ This can only happen if the current demand by the KTDA  will tickle down and ensure all the farmers pluck  the quality green leaf,” said Mr Karomo.

 In the past one month, KTDA Holding leadership under the chairmanship of Enos Njeru has deployed agriculture extension officers in the tea  growing belts to pluck quality green leaf  not to compromise the set standards in the market.