Lockdowns force commodity markets to suspend auction
Suspended: The Mombasa Tea Auction was recently suspended due to the Covid-19 pandemic. PHOTO BY EDGAR R BATTE
Suspension of auction markets that take up much of Uganda’s exports has affected dealers and manufacturers.
Auction markets including the Mombasa Tea Auction and the Netherlands Flower Market, are some the largest buyers of Uganda’s tea and flowers.
However, they are currently suspended, which has negatively affected exporting countries, among them Uganda.
Ms Esther Nekambi, the Uganda Flowers Export Association (UFEA) executive director, at the weekend told Daily Monitor that all the association’s members had cut down on export volumes due to low demand.
“Currently our members have reduced export volumes because most of the orders were canceled. This is because the destination countries went into lockdown,” she said, noting that they were now relying on agents to make small supplies, especially to supermarkets.
However, she could not estimate how much the industry has so far lost, saying it was too early to quantify the loss.
According to Bank of Uganda, the flower industry exported 677 tonnes worth $5.3m in February up from 518 tonnes worth $4.3m exported in January.
In 2019 Uganda exported flowers worth $54.5m (Shs201b) but lower than the $60.8m exported in 2018.
Equally, the suspension of the Mombasa Tea Auction, which is estimated to handle tea volumes worth $250m per week, has affected supplies from Uganda, Kenya, Rwanda, Tanzania, Burundi, Malawi, DR Congo and Ethiopia.
For at least three weeks the auction has been under suspension indicating that more than $750m (Shs2.7 trillion) has so far been lost.
More than 20 per cent of tea (764,777 kilogrammes) that was offered in late March was not sold due to uncertainty in the market.
Mr Edward Mudibo, the East Africa Tea Traders Association managing director, recently told The EastAfrica they had taken a decision to postpone all auctions until the Covid-19 pandemic is controlled.
The cancellations were a result of the suspension of ships that ferry tea.
Tea supports more than 600,000 livelihoods ranging from farmers, brokers, warehouse owners from 10 countries in the region.
The Mombasa Tea Auction is the second largest tea trading auction in the world after Colombia.
It serves Uganda Tea Association, Rwanda Tea Association, Tea Association of Tanzania, Tea Association of Malawi and Burundi Tea Authority.
The top tea export markets include Egypt, Pakistan, UK, Afghanistan and Sudan.
Largest offers
Kenya floats the largest share of tea offers. The country in 2019 floated more than 372.15 million kilogrammes followed by Uganda, which offered more than 73.95 million kilogrammes.
However, whereas Kenya sold each kilogramme of tea at an average price of $2.24, Uganda was sold at $1.16.
Rwanda tea fetched the highest average price at $3.05 for every kilogramme, while Tanzania and Burundi teas were bought at $1.30 and $2.50 per kilogramme, respectively.
