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INCOME: The government has raised concern over the sharp decline in tea prices at the Mombasa Tea Auction which could discourage small-scale farmers from growing the cash crop and shift to other economic activities.

Agriculture Cabinet Secretary Peter Munya warned the situation is worrying and must be urgently addressed to avoid an economic slump in the multi-billion shilling industry.

“The low tea prices is a threat to the livelihoods of over 620,000 smallholder farmers and the country’s socio-economic growth,” he said.

Speaking during a media brief on current tea prices at a Nairobi hotel on Saturday, Munya said measures must be put in place to help tame the dipping tea prices and guarantee stability in the market.

Value chain

“Should the situation deteriorate, over 6.5 million Kenyans who depend on the tea value chain directly and indirectly will be critically affected,” Munya cautioned.

The low prices are likely to interrupt the government reform agenda that seeks to guarantee efficiency, transparency and sound governance in order to improve farmers’ earnings.

In the last few weeks, the CS said a sharp decline in tea prices has been witnessed at the Mombasa Tea Auction. 

“The average prices recorded in the auction has dropped to an all-time low of $1.80 (Sh194.22).

This is much lower compared to an average price of $2.09 (Sh225.511) recorded during the same period last year and $2.23 (Sh 240.617) for the same period in the year 2019,” said Munya. 

He observed that the current price is not only lower compared to the previous years, but is also almost at par with the cost of production, which currently stands at approximately Sh183.43 ($1.70) and therefore not sustainable as farmers are now operating at a loss.

“It is important to note that the smallholder sub-sector, which accounts for 56 per cent of the national production, is the most affected,” he added.  

To arrest the situation, starting this week Munya directed that farmers should set a reserve minimum average price at the auction, based on the cost of production, the grade of the tea and a reasonable return to the tea farmer.

“The smallholder producers are expected to manage their supplies of black CTC to the Auction.

This will include diversification into Orthodox tea production which should be enhanced especially during the flash periods,” he added.