Rwanda overtakes Kenya in the global tea market

The Mountain Journal  

The price of Kenyan tea remained under pressure following the impact of the 0.8 per cent tea levy (Sh 2.28) charged to buyers before the shipment of the commodity from the Mombasa Tea Auction.

Instead, the buyers bid down the price of the commodity, thus transferring the effects of the levy to factories that are majority-owned by smallholder farmers.

This week, Rwanda tea weighing 536,014 kgs attracted buyers who paid Sh 356.04 ($2.76) per kg, while Kenya's offer of 13,036,928 kgs saw only 11,071,249 kgs bought, trading at Sh 295.41 ($2.29) per kg, with 1,965,679 kgs returned to the warehouses unsold.

The small holder factories under KTDA management offered 7.39 million kgs, with only 3.71 million kgs traded, as 3.68 million kgs were declared unsold, awaiting to be brought back after three weeks.

Gathuthi Factory was ranked the only factory that achieved a price above $3.03(Sh 390.87, Mununga  Sh 381.84($2.96) per kg, Rukuriri  Sh 376.68 ($2.92) per kg, among others. 

In the west of the rift, Momul factory sold its consignment of 109,744 kgs at an average price of Sh307.02($2.38).

The stakeholders argue that the buyers moved to the alternative markets to avoid paying the levy imposed on the Kenyan teas at the auction.

 EATTA Managing Director George Omuga said the auction traded 13,036,928 kgs from five tea-producing nations, where 11,071,249 kgs were sold at an average price of  Sh 287.67 ($2.23) per kg. 

 “ Since the introduction of the levy on May 1, Rwandese tea took the command of the market, selling all their stocks, leaving behind the premier tea due to the higher price owing to the imposed levy,” said Omuga.

KTDA Holding Chairman Enos Njeru calls for a change in the formula to be pegged on the volume, instead of on the value at the auction.

The levy, he said, since it was implemented, has eroded the gains that had been achieved as the buyers have moved to buy alternative tea.

“This trend is evident across several factories as reflected in the East of the Rift, with reports indicating to affect the factories that include  Rukuriri, Mungania, Imenti, Gathuthi, Gacharage, Makomboki, among many others,  as the buyers offer lower prices for the premier teas,” said Mr Njeru.

He added that in the year, the industry had faced challenges of the closure of the Strait of Hormuz and the untimely introduction of the Tea Levy. 

 TBK CEO Willy Mutai has defended the tea levy through the vernacular radio stations, reaching the farmers across the counties.

Mr Mutai points out that the tea levy intends to collect Sh 1.2 billion for use in the price stabilisation, facilitate the Tea Research Institute, assist in putting up infrastructure, and marketing of the commodity internationally, among other requirements.

“ Other tea-producing nations have a levy that they charge; why is there alot of opposition on the same in Kenya?” he said on the steps taken in Kenya,” said Mr Mutai.