Kampala. East African tea farmers are facing tough times as prices continue to drop.
Information from the Mombasa auction indicates prices have been going down for the last two consecutive months.
The current drop in prices represents an 18-week low since the beginning of the year.
A kilogramme of made tea on average traded at Shs9,622 last week, down from Shs10, 234 in the previous sale, indicating a 6.3 per cent drop.
The quantities offered for sale last week grew by 300,000 kilogrammes to six million kilogrammes from the previous 5.69 million kilogrammes.
Lack of interest
Information from the auction also indicates that key buyers expressed little interest in the last three sales as volumes grew.
Talking to Daily Monitor’s sister newspaper Business Daily, Ms Elizabeth Kaimenyi, the head of Tea directorate at the Auction, said major buying nations such as Pakistan, Egypt and other Middle East buyers did not show much interest during the auction.
“Some of our key buyers such as Pakistan, Iran and Yemen did not show a lot of interest in the past three auctions, thus reducing the demand for the commodity in the market, a move that has affected the price,” Ms Kaimenyi said.
On the recent auction carried out on August 17 and 18, a total of 7.3 million kilogrammes were offered and out of these 5.9 million kilogrammes were sold indicating a 23 per cent total sale.
Kenya, the leading contributor on the Auction, offered 5.6 million kilogrammes and was able to sale 4.5 million, indicating a 24 per cent sale.
Uganda, the second largest on the auction, offered 1.1 million kilogrammes and was able to sale 922,000 kilogrammes; indicating a 19 per cent sale.
The East Africa other countries which offered tea were Rwanda, Burundi and Tanzania who were ranked third, fourth and fifth respectively.
Tea is Uganda’s third largest agricultural export commodity by value. The tea sector has performed far below its potential largely owing to poor coordination of activities in the sector.
Uganda has about 200,000 hectares suitable for tea production, but only 14 per cent (28,000 hectares) is utilised both by small holder and estate owners. Exports have stagnated at around 50,000 metric tonnes in the last five years.
On average, 93 per cent of tea products are exported while 7 perc ent is consumed domestically (MAAIF, 2012).