TBT: Dar tea auctions impressive despite little local participation

The Tea Board of Tanzania (TBT) has expressed confidence over the ongoing auctioning at the Dar es Salaam Tea Auction, saying the trend of traded produce was impressive.

Tanzania held its first-ever Dar es Salaam Tea Auction on November 13, 2023, involving 66,920 kilogrammes of the produce from Mohammed Enterprises Tanzania Limited (MeTL) and the East Usambara Tea Company (Eutecom).

During the auction, 31,094 kilogrammes of tea, which is equal to 46.5 percent of the auctioned tea, were traded, fetching $0.77 and $0.92 at the minimum and maximum price, respectively.

Buyers who took part in the auction are Chai Bora Limited, Afri Tea and Coffee Blenders 1963 Ltd and Black Gold Tea Limited.

The second auction was held on November 27, 2023, where 73,552 kilogrammes of the produce was subjected to auctioning, but only 44,676 kilogrammes were sold, which is equivalent to 61 percent of the offered tea.

The produce, jointly issued for sale by METL and DL Group, fetched $0.84 and $0.99 minimum and maximum prices, respectively.

The auction attracted five buyers, namely: Tea Export Agency, Tanzanglobal, Chai Bora Limited, Afri Tea and Coffee Blenders 1963 Ltd, and Black Gold Tea Limited.

Speaking exclusively to The Citizen, TBT director general Mary Kipeja said the board has recorded a huge success in the country’s history through the auctioning of 46.5 percent of the offered tea.

“This is because similar prices were recorded when growers took their produce to Mombasa in neighbouring Kenya for auctioning,” she said.

“Interestingly, the percentage of auctioned tea has been increasing one auction after the other,” he added.

She said the board was now planning to mobilise increased participation from tea producers in order to proliferate their number from the present three.

Apart from fetching the same price growers were getting at the Mombasa auction, she said domestic auctioning of the produce enables farmers to save 50 percent of the costs incurred for transportation of the produce to neighbouring Kenya.

According to her, growers trading the produce through the Dar es Salaam market are given warehouses for storage of the produce free of charge.

Regarding growers from neighbouring countries, she said the board was in discussion with players from neighbouring countries, including Burundi and Malawi, in order to trade their produce in the country’s market.

“We are mobilising international potential buyers to participate in the local auction in order to increase the number of dealers involved in the process and ultimately maximise competition,” she said.

Ms Kipeja said the board was mobilising increased participation from local buyers and ensuring that international buyers have domestic representatives entitled to the procurement of the produce and adequate transportation to their respective countries.

“By increasing the number of players (growers and buyers), more jobs will be created for young Tanzanians and, therefore, reduce the unemployment rate in the country,” she said.

Challenges

Ms Kipeja said the board faces the challenge of increasing the number of tea growers participating in the auction from the current three who are taking part in the ongoing public sale.

According to her, the relatively low number of growers was contrary to the government’s directives requiring local producers to take at least 15 percent of annual productions to the Dar es Salaam market for auctioning.

“We are discussing with local producers; hopefully, by the end of December this month, an agreement will be reached that will ensure all growers have complied with the government’s directives to trade 15 percent of annual production,” she said.

Since an increased number of buyers would provide competitive prices, Ms Kipeja said the regulator has the task of ensuring that the number of growers participating in the auction is significantly increased.

She said they are also required to recruit more brokers to widen growers’ choices on a variety of players for cooperation when taking part in the Dar es Salaam Tea Auction.

“Other small challenges include the shortage of US dollars, leading to payment delays despite being in the 14-day payment ceiling,” she said, adding that the board was well prepared to address the challenges.

Quality

Ms Kipeja said TBT has set strategic objectives aimed at ensuring that Tanzania tea acquires the pre-requisite quality in order to attract global buyers.

The objectives include mobilising small, medium, and large-scale growers to ensure they conform to agricultural good practices such as proper use of fertilisers, drilling water wells for irrigation purposes during drought seasons, and timely harvesting and blending of the produce.

“Blenders are also mobilised to timely carry out maintenance on machines to assure that processed tea meets the set standards,” she said.

Auction target

Ms Kipeja said the Dar es Salaam Tea Auction was a new initiative involving stakeholders who have largely established themselves in the Mombasa market, where they have a network of agents.

She said the directive to trade 15 percent of the annual production translates to 4,000 tonnes of the 27,000 tonnes.

“Our emphasis is that tea producers should increase production and the produce engagement for the Dar es Salaam Tea Auction in order to meet the 4,000-tonne target,” she said.

According to her, domestic dealers and those from neighbouring countries should use the Dar es Salaam Tea Market for auctioning their produce, noting that buyers are interested in blended tea varieties from different countries.

“We believe that by the first quarter of 2024, key producers from neighbouring countries will start using the Dar es Salaam market and significantly increase the participation of Tanzanians who take part in the initiative,” she added.

Furthermore, she said increased participation from local buyers and international players will significantly increase the price of the produce.

“We are determined to empower small-scale growers to improve the quantity of blended tea produced by large-scale farmers. Empowerment will involve the establishment of processing factories through their respective Agricultural Marketing Cooperative Societies (Amcos) and directly taking the produce for auctioning.

“Small-scale farmers are set to contribute 47 percent of total auctioned tea by March 2024, something that will not only increase the volume but also the price during auctions as they will be able to reach final consumers,” she added.

She said it was anticipated that by June 2024, local blenders should trade 30 percent of their produce at the Dar es Salaam Tea Auction.

Ms Kipeja said recently most Tanzania growers were still honouring contracts signed at the Mombasa Tea Auction.

“Our hope is that most of these contracts will be ending in June 2024, therefore enabling local players to increase the quantity of domestically traded tea at the Dar es Salaam market, hence realising the 30 percent new target up from the current 15 percent,” she said.

What stakeholders say

MeTL Group manager George Mwamakula said that despite the tea market passing through difficult moments globally, the initiative that has been delayed is worth Tanzanian support.

Mr Mwamakula called for efforts to include Tanzania in the Rain Forest Alliance Certification that covers many countries in order for the country’s tea to get the pre-requisite world recognition.

The Rainforest Alliance seal promotes collective action for people and nature. It amplifies and reinforces the beneficial impacts of responsible choices, from farms and forests all the way to supermarket check-out.

The seal allows recognition and the choice of products that contribute towards a better future for people and the planet.

Mr Mwamakula said the International Organisation for Standardisation (ISO 22000) on Food Safety Management and ISO 14000 related to environmental management should also be pushed for.

“The government should take specific action to provide subsidies to players who are yet to complete the processes, because finally the Dar es Salaam Tea Auction is the focal point for foreign players,” he said over the phone.

“Provision of subsidies should be done like what is being done in the countrywide distribution of fertiliser to farmers. Secondly, irrigation should be done in conjunction with water basin boards, but multiple fees imposed in the area should be eliminated for the benefit of Tanzanian agriculture,” he added.