Smallholder tea factories affiliated with the Kenya Tea Development Agency (KTDA) generated KSh 679 million from the sale of 2.60 million kilograms of tea at the Mombasa Tea Auction last week. This revenue was secured during an auction that saw increased buyer participation, with 47 buyers compared to 13 in the preceding week.

Context of the Tea Auction Performance

The auction, held on September 29 and September 30, handled a total of 6.7 million kilograms of tea from four East African countries. Kenya contributed the majority, offering 5.4 million kilograms from KTDA factories and independent producers. Uganda, Rwanda, and Burundi supplied 805,469 kilograms, 389,334 kilograms, and 160,204 kilograms, respectively.

Several factories achieved premium prices, ranging between KSh 371 and KSh 352 per kilogram. These included Gathuthi, Mununga, Igembe, Ndima, Kiegoi, Githongo, Imenti, Makomboki, Rukuriri, and Ngere. Factories from the west of the Rift Valley, such as Boito (124,734 kgs), Kobel (104,128 kgs), Oleng (111,969 kgs), and Momul (110,192 kgs), offered the highest volumes. Igembe tea factory in Meru offered the least at 3,002 kilograms.

Among the top purchasers, Global Tea acquired 17,980 packages, Mitchell Cott bought 14,700 packages, LAB International secured 6,320 packages, and KTDA-owned Chai Trading purchased 5,760 packages.

Law and Policy Governing the Tea Sector

The Kenyan tea industry operates under the Tea Act 2020, which re-established the Tea Board of Kenya to regulate, develop, and promote the sector. The Act mandates that all teas processed and manufactured in Kenya for export, excluding orthodox and specialty teas, must be sold exclusively at the tea auction floor. Tea factories are required to register with the Tea Board and the auction organizer directly. The Act also stipulates that proceeds from tea sales must be remitted to factory accounts within 14 days of the auction, and tea growers should receive 50 percent of their green leaf payment within 30 days, with the balance paid within three months of the financial year-end. A tea levy of one percent of the auction value is imposed on teas sold through the auction, with 50 percent allocated for income or price stabilization for growers.

Stakeholder Perspectives and Challenges

The tea sector is a significant employer in Kenya's private sector, supporting approximately 3 million livelihoods. Despite the recent earnings, the industry faces persistent challenges, including fluctuating global commodity prices, adverse climatic conditions, and rising production costs. An expert in the tea value chain, Mr. Kamore, noted that prices have been down, with hopes that ongoing rains will improve the situation for tea growers. The strengthening of the Kenyan shilling against the dollar has also been cited as a factor impacting farmer payments.

Furthermore, the ban on Kenyan tea imports by Sudan, a key market for specific tea grades, has resulted in an estimated KSh 6.5 billion in annual losses for the industry. Peter Kimanga, a Director at KTDA, emphasized the unique challenges posed by the Sudanese market, as it primarily imports specific tea grades not easily absorbed by other buyers.

Evidence and Data

• Total Earnings (last week): KSh 679 million
• Volume Sold (last week): 2.60 million kilograms
• Auction Dates: September 29 and September 30 (2025)
• Number of Buyers: 47 (up from 13 previously)
• Total Tea Handled (East Africa): 6.7 million kilograms
• Kenya's Contribution: 5.4 million kilograms
• Highest Prices: KSh 371 to KSh 352 per kilogram
• Estimated Annual Losses from Sudan Ban: Over KSh 6.5 billion

Risks and Implications

The volatility of tea prices and market access issues, such as the Sudan ban, pose significant risks to the livelihoods of smallholder tea farmers. Continued low prices could lead to reduced monthly earnings and force farmers to seek alternative income sources. There are also concerns about potential manipulation at the Mombasa Tea Auction, as highlighted by KTDA director Cheruiyot Baliach.

Unknowns

The long-term impact of the ongoing rains on tea production volumes and prices remains to be seen. The timeline for resolving diplomatic issues leading to the Sudan tea import ban is also uncertain. Additionally, the full impact of the strengthening shilling on future farmer payments requires further assessment.

What to Watch

Stakeholders will be closely monitoring the average tea prices at the Mombasa auction, government interventions to address market access challenges, and the implementation of policies aimed at stabilizing farmer incomes. The progress of product diversification and value addition initiatives by KTDA will also be crucial for the sector's resilience.