Unsold Tea Stocks Valued at KES 32 Billion Cause Farmer Payment Delays
Unsold tea stocks valued at nearly Sh32 billion have accumulated at the Mombasa Tea Auction, creating a crisis for Kenya’s tea industry and putting the livelihoods of millions of farmers at risk. The issue stems from the introduction of a minimum guaranteed price for tea, which has led to a significant backlog of unsold tea.
The Ministry of Agriculture is alarmed by the situation, as payments to farmers in key tea-growing regions such as Kisii, Nyamira, Kericho, and Nandi have been delayed. The crisis has been exacerbated by a stand-off over state-fixed minimum prices at the auction, which has led to warehouses overflowing with unsold tea.
Industry estimates reveal that around 60 percent of tea sent to the weekly auction over the past year remains unsold, leaving firms and the Kenya Tea Development Agency (KTDA) struggling to pay farmers. Some companies are even taking out loans to meet their payment obligations to growers.
Agriculture and Crops Development Principal Secretary Paul Ronoh confirmed the crisis during a visit to the tea auction and KTDA-run factories. He reported that more than 100 million kilograms of tea remain unsold, far exceeding the international standard of about 30 million kilograms. This unsold tea, valued at approximately Sh31.58 billion based on a minimum price of $2.43 (Sh315.87) per kilogram, primarily originates from the western Rift Valley growing zones.
Dr. Ronoh’s acknowledgment of the glut follows recommendations from Nairobi Securities Exchange-listed firms Williamson Tea and Kapchorua Tea. These companies suggested destroying the unsold stocks held by KTDA to address market saturation and restore normal pricing. They criticized the minimum pricing system, which they argue has harmed producers unable to supply top-grade tea.
Williamson Tea’s financial report highlighted the dire situation, noting that tea prices have dropped to unsustainable levels due to excess supply. The company called for immediate action, including the removal of the auction minimum pricing system.
KTDA has denied these claims, although industry insiders confirm the worsening glut. The Kenya Tea Growers Association (KTGA) has warned that small-scale farmers and producers could go out of business, jeopardizing the tea-growing economy in western Kenya. KTGA advocates for the suspension of minimum prices for tea from the western Rift Valley to help alleviate the stockpile.
The auction operates on a two-day format, with secondary grade tea sold on Mondays and premium grade tea on Tuesdays. Unsold tea is reprinted in a new auction catalogue and returned for sale two weeks later, but can only be brought back twice. Data from recent auctions indicates that 60.01 percent of tea went unsold, and any tea remaining after two auction trials is sold at lower prices in a “passive window.”
Armed with a Laptop and a cup of coffee, Rothschild is on a mission to conquer the news world, one headline at a time.