Uganda fails to gain from high tea prices

20% decline in supply at Mombasa auction in first 10 weeks of 2017 pushes prices up

Prices of tea at the Mombasa Auction, the world’s second largest selling centre have been high this selling season – at US$3 per kg in the first 10 weeks of 2017 compared to US$2 per kg in the same period of 2016.

Players attribute the relatively higher price to low supply because of dry spells that hit the region in the entire parts of last year.

A sector analyst, Adolf Sabiiti Tumwesige says supplies to the market going forward in the year will depend on how much rain the country and the region gets. Tumwesige, who is a former general manager of one of Uganda’s largest tea factories – Mpanga Growers Tea Factory in Kabarole, western Uganda, says dry seasons cause almost a 50% reduction in supply of tea on the market.

Data from the East African Tea Trade Association (EATTA) indicates a 20% reduction in supply of tea by 1.8 million Kgs to 7.1 million kgs in the first 10 weeks of 2017 compared to the same period in 2016.

Since trade statistics of first 10 trading weeks of the year often signals the performance for the year, 2017 is already being billed as a good year for a section of tea dealers in the region.

But some countries like Uganda and to some extent Tanzania have not benefited from the higher prices according to tea brokers. In the case of Uganda, it boils down to quality.

“Most of the tea that comes from Uganda is graded poorly because of its poor quality,” says Tumwesige.

According to trading numbers for March 7, 2017 presented by Africa Tea Brokers, some Kenyan sourced teas fetched as high as KShs 400 (US$3.8) per kilogram compared to KShs 250 (US$2.3) for the highest priced Uganda and Tanzanian teas. Teas from Rwanda, Burundi, Malawi, Democratic Republic of Congo, Madagascar, Mozambique and Ethiopia recorded fairer prices of over KShs 300 (US$2.8) per kilogram.

Players say leaf density is becoming increasingly important in key markets, where some customers have very strict standards.  According to the EATTA website poor teas are light (have a high volume per 100g) and these cannot be bought by traders from key markets. They are either discounted or even ignored by buyers. Uganda and Tanzanian tea mostly fall in this category and attract low grades. Kenya and other markets on the other hand market tea that is more yellow or golden colored which attracts higher prices.