Kenya’s tea industry recorded a significant milestone in the second weekly auction of 2025, generating KSh 1.6 billion from the sale of 5,119,905 kilograms of tea at the Mombasa Tea Auction. The strong performance highlights the sector’s resilience and the impact of efforts to improve tea quality.

The auction, conducted on January 13 and 14, saw tea factories in both the East and West of the Rift generate substantial revenues. Factories in the East sold 2,559,681 kilograms, raking in KSh 1,080,063,855, while their counterparts in the West garnered KSh 567,100,213 from the sale of 2,560,224 kilograms.

Top-Performing Factories

Several factories emerged as top performers in terms of revenue:

• Ngere Factory (Murang’a County): Sold 137,664 kilograms for KSh 58,248,392.
• Makomboki Factory: Sold 117,600 kilograms, generating KSh 51,124,248.
• Kimunye Factory: Achieved sales of 116,720 kilograms, earning KSh 51,042,823.
• Kinoro Factory: Sold 107,435 kilograms for KSh 46,428,035.

On the western side, Litein Tea Factory led the volume sales, selling 165,764 kilograms, followed by Mogogosiek with 153,700 kilograms and Kapteket with 152,584 kilograms.

Strategic Focus on Quality

Kenya Tea Development Agency (KTDA) Holdings Chairman, Enos Njeru, commended farmers for their dedication to producing high-quality tea, which has been instrumental in attracting buyers and competitive prices.

“Since September 2024, KTDA, the Tea Board of Kenya (TBK), and other partners have focused on enhancing tea quality through the value chain. This initiative has already started yielding results, as reflected in the competitive pricing at the auction,” Njeru remarked.

The emphasis on quality aims to address challenges such as price fluctuations and ensure Kenyan tea remains competitive in the global market. The quality-driven approach includes modern farming techniques, better processing practices, and adherence to international standards.

Buyer Dynamics

In the buyer category, Chai Trading emerged as the top buyer, purchasing 1,161,906 kilograms of tea. Other leading buyers included:

• LAB International: 1,138,226 kilograms.
• Global Tea and Commodities: 984,058 kilograms.
• Mitchell Cotts: 620,796 kilograms.
• Devchand Keshavj: 570,333 kilograms.

At the lower end of the spectrum, buyers such as Cray Line and Axis Tea & Services purchased minimal quantities, highlighting the diversity of buyers at the auction.

Regional Participation

The Mombasa Tea Auction is a regional hub, attracting tea producers from neighboring countries. The analysis of the auction revealed the following contributions:

• Rwanda: 310,448 kilograms.
• Tanzania: 48,150 kilograms.
• Burundi: 28,320 kilograms.
• Uganda: 711,284 kilograms.

The participation of these countries underscores the auction’s importance as a regional trading platform and its role in promoting East African tea globally.

Challenges Facing the Tea Sector

While the performance at the auction is commendable, Kenya’s tea industry continues to face challenges, including:

1. Global Market Fluctuations: Tea prices are influenced by global demand and supply dynamics, which can create uncertainty for farmers and traders.
2. Climate Change: Erratic weather patterns affect tea production and quality. Prolonged droughts or excessive rainfall can disrupt the harvest cycle.
3. High Production Costs: Inputs such as fertilizer, labor, and energy remain costly, reducing profitability for farmers.
4. Competition from Other Producers: Countries such as Sri Lanka, India, and China pose stiff competition in the global tea market.

Addressing the Challenges

To mitigate these challenges, stakeholders in the tea industry are implementing several strategies:

• Diversification: Encouraging farmers to produce specialty teas such as purple tea and orthodox teas, which fetch higher prices.
• Sustainability Practices: Promoting environmentally friendly practices to combat the effects of climate change and ensure long-term productivity.
• Direct Sales and Branding: Initiatives like direct sales to consumers and branding Kenyan tea as a premium product aim to increase profitability and market visibility.
• Government Support: Policies such as subsidies on inputs and investment in research and development are crucial for sustaining the industry.

The Way Forward

The tea sector remains a cornerstone of Kenya’s economy, providing livelihoods to millions and contributing significantly to foreign exchange earnings. With KTDA and other stakeholders prioritizing quality, the industry is poised for further growth.

The Mombasa Tea Auction, as a critical trading platform, will continue to play a pivotal role in determining the future of tea in Kenya and the region. As efforts to enhance quality and address challenges gain momentum, the sector’s potential to drive economic development and improve farmer welfare remains promising.

Conclusion

The KSh 1.6 billion generated in this week’s auction is a testament to the resilience and competitiveness of Kenya’s tea industry. By focusing on quality, embracing innovation, and fostering regional collaboration, the industry is well-positioned to navigate challenges and capitalize on emerging opportunities in the global market.

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photo source: Google

By: Montel Kamau

Serrari Financial Analyst

20^th January, 2024