Crisis hits E. Africa tea sales

Dar es Salaam. Sales at the Mombasa tea auction have been hit by the Egyptian crisis. Tanzania which exports its tea to Egypt through the auction has reportedly lost 50 per cent of its sales.

The Kenya Tea Board says stakeholders have been looking for other tea markets following the Egyptian turbulence, which has reduced the export market value by 23 per cent.

Tea Board of Tanzania (TBT) director general Mathias Asenga, says since half of Tanzania’s tea is exported through the Mombasa-based auction, the Egyptian crisis might hurt the country’s tea industry to a certain extent.

The remaining half is exported directly by tea processing companies with internationally affiliated companies such as Unilever.

According to Mr Asenga, the exact impact would be ascertained next month after a thorough analysis of data is made.

A TBT report shows that there are 19 primary processing factories. They are Musekera, Chivanje, Katumba and Mwakaleli in Rungwe; Kibena, Luponde and Lupembe in Njombe; Kilima, Kibwele, Lugoda, Kiganga and Itona in Mufindi; Bulwa, Kwamkoro and Marvera in Muheza; Ambangulu and Dindira in Korogwe; Mponde and Herkulu in Lushoto and Maruku in Bukoba.

There are also five licensed blending and packing factories. They are, with their locations in brackets, Afri Tea and Coffee Ltd, Chai Bora (Mafinga), Promasidor Tanzania (Dar es Salaam), International Food Packers (Tanga) and Zanzibar Tea Packers (Zanzibar)

Tanzania is Africa’s fourth-largest tea producer. Kenya leads and Malawi follows. Uganda is the third, according to the UN Food and Agriculture Organisation.

Leaf production may increase to 36 million kilograms in the 12 months through June 30, 2013, from 34 million to 35 million kilograms this fiscal year.

According to a Bank of Tanzania report, the country’s tea export value rose from Sh83.2 billion ($52.7 million) last year to Sh92.8 billion ($58.2 million) in June this year.

Kenya’s tea sales at the Mombasa auction have continued to fall for the second week running following Egypt’s political instability.

According to the East Africa Tea Trade Association, the instability escalated two weeks ago and had a negative impact on tea prices.

Last week, 26 per cent of the 135,007 packages which were on offer remained unsold with a depressed general demand which was sustained through the auction. These amounted to nearly a third of the tea on offer which remained unsold.

Egypt, which imports 23 per cent of all tea through Kenya, has remained a top importer of Kenyan tea, beating other markets among them Pakistan and Afghanistan.

The Egyptian upheaval began when the military deposed president Mohamed Morsy on July 3, this year. Nearly 1,000 people have since been killed in a series of clashes between his supporters and Egyptian security forces.

The chairman of Kenya Tea Development Agency Holdings Ltd, Mr Peter Kanyago, was recently quoted as saying Egypt’s troubles threaten jobs because the Egyptian market accounts for 30 per cent of Kenyan tea exports.

Tea earnings bring Kenya an average of KSh100 billion ($1.14 billion) a year, Mr Kanyago said.

The Mombasa tea auction is one of 11 largest black tea auctions across the globe, where about 80 brokers and buyers take part in the transactions that take place every Monday and Tuesday.

Commenting on the issue, the chief executive officer of the Rungwe Smallholders Tea Growers Association, Mr Lebi Hudson, says if the Kenyan tea market has been affected by the Egyptian crisis definitely Tanzania will face a similar problem.

“Since Kenya is the strongest dealer in Africa with 60 million tonnes of tea in stock, it has the strongest bargaining power to manipulate the market. Tanzanian tea producers must get prepared for that issue.”

As a result of that problem, he says, competition in global tea trading will be fiercer than at present. He has advised tea stakeholders to find a viable means of tackling the expected stiff competition in the global tea trading.