Tea sales at the weekly Mombasa auction have fallen below last year’s levels for the first seven weeks of the year with traders blaming slow shipment of cargo, heralding lower returns for growers in the short-term.
Market data showed that a kilogramme of tea has been sold at an average $2.64 compared to last year’s $2.85, representing a 7.3 per cent drop.
«Buyers have not been active because of the risk of remaining stranded with cargo for too long at the port,» Peter Kimanga of Global Teas and Commodities said.
The volume of crop offered for sale at the auction has also dropped due to dry weather conditions that affected production as well as recent incidents of frost attacks in some growing areas in Kenya.
Traders said the hitches in shipment of cargo through the port of Mombasa have affected demand from buyers.
The port of Mombasa is currently experiencing cargo congestion, which Kenya Ports Authority (KPA) attributed to lack of space following delays by importers and clearing agents to collect containers from the port and the various container freight stations in good time.
«Nobody is prepared to make large orders because of the fear of attracting other costs such as storage charges as you wait to get a passage through the port,» Peter Lang’at, a dealer said.
«This has affected performance of the auction.»
The port is important to the region because besides Kenya it also serves several neighbouring landlocked countries including Uganda, Rwanda and Burundi, which rely on it for shipments of vital commodities and oil.
The congestion is likely to have a dent cause a dent on the earnings of Kenyan tea growers unless normalcy is restored.
Statistics from the auction indicated that Kenyan tea has been sold at an average $2.92 a kilo this year compared to $ 3.12 last year, a drop of 6.4 per cent.
«The signs at the start of the year are not good in terms of prices and something needs to be addressed to clear hitches such as congestion at the port that is affecting demand,» Mr Kimanga said.
Kenya earned a record Sh109 billion from tea exports last year despite a drop in volumes, thanks to high prices and a weaker local currency against the dollar.
The country produced 377 million kilogrammes last year, down five per cent from 399 million kilogrammes in the previous period, when it had earned Sh97 billion from the crop.
Traders remained optimistic of a good performance this year if the congestion at the port of Mombasa is cleared. The KPA is currently undertaking measures to ease the congestion.
The authority said last Wednesday it planned to auction containers that have stayed for more than 100 days at the port after a special waiver on storage charges failed to entice their owners to remove them. KPA had in December announced it would waive storage charges on the over-stayed containers if their owners committed by next month, as part of efforts to clear congestion that is affecting the shipment of key items through the facility.
But with only two days to the deadline more than 200 containers of cargo remained uncollected stacked at the port amid growing protest by traders inconvenienced by congestion.
Besides efforts by KPA to ease congestion, Kenya Revenue Authority also plans to destroy 437 over-aged vehicles at the port starting next month.
Source: allafrica.com/stories/201202270355.html
Kenya: Mombasa Port Congestion Lowers Demand for Tea At Auction
