Kenya Tea Development Agency (KTDA) has initiated the release of aged tea stocks into the market below the government-mandated minimum price, aiming to alleviate warehouse congestion and boost liquidity.

Exceeding 70 million kilogrammes, the tea reserves within KTDA’s warehouses and facilities have remained stagnant due to their uncompetitive pricing, stemming from the enforced minimum price at the Mombasa Auction.

Consequently, at least 16 million kilograms of tea have been offloaded onto the market, priced as low as $0.70, as confirmed by Business Day Africa.

This move threatens to undermine farmers’ profitability, particularly amidst a notable appreciation of the Kenyan shilling, which adversely impacts export revenues.

Originating from as far back as 2022, these tea stocks have languished in the market due to the rigid imposition of a $2.43 minimum price, instated by the prior administration to safeguard farmers’ income amidst declining tea prices below production costs.

Critics contend that anchoring the minimum price to production expenses rather than the intrinsic value of tea was imprudent.

Furthermore, industry experts emphasise the impracticality of establishing a uniform market price due to the varied quality of teas sourced from distinct regions.

Traders underscore that the heterogeneous nature of teas from diverse locations precludes the feasibility of a standardised market price.

“Auction prices should reflect the inherent disparities in quality between teas originating from the eastern and western regions of the Rift,” asserted a tea trader, highlighting the inequity perpetuated by the current pricing structure.

Consequently, the inflexibility of the minimum price regime has prompted buyers to favor alternative high-quality teas over KTDA offerings, exacerbating the volume of tea left unsold at auctions.

Acknowledging the concerns raised by stakeholders, Principal Secretary for Investments Abubakar Hassan Abubakar hinted at the government’s inclination to reassess the minimum price policy.

Speaking at a recent forum in Nairobi, Mr Abubakar conceded the unintended consequences of pricing controls and proposed initiating dialogues toward its liberalisation.