Williamson Tea and Kapchorua Tea, two Nairobi Securities Exchange-listed companies, have called for the destruction of an estimated 200 million kilogrammes of unsold tea owned by the Kenya Tea Development Agency (KTDA), arguing that excess tea supplies are hurting industry prices and contributing to market saturation while distorting prices.
The government’s 2022 minimum pricing system has caused tea prices to drop to unsustainable levels, negatively affecting producers who cannot supply top-grade tea.
To safeguard farmer earnings, officials set a minimum price of $2.43 (Ksh 314.73) per kilogram.
In the second half of 2023, about 60% of stocks sent to the weekly sale at the Mombasa auction went unsold and were stored in warehouses.
They contended that further lowering the community’s price would undermine the principle of demand-supply equilibrium.
The official agreed to destroy the tea in the warehouses and start fresh, rather than having a lot of tea in the market, which would distort prices.