Mombasa Tea Auction Volumes Fall as New Levy Pressures Exporters and Smallholder Sales

Smallholder tea sales at the Mombasa Tea Auction experienced a notable decline between January and June, falling to 128,554,359 kilograms from 138,845,002 kilograms in the corresponding period of the previous year. According to a report released by the Tea Board of Kenya, factories situated west of the Rift Valley sold 49,935,039 kilograms between sale 1 and sale 27 of the 2025/2026 season. This compared to 55,263,544 kilograms during the prior year. Meanwhile, factories located east of the Rift Valley auctioned 78,619,320 kilograms, marking a decrease from the 83,581,458 kilograms recorded previously. Total made tea auctioned by Kenya's producers, including Kenya Tea Development Agency factories and independent estates, reached 205,884,003 kilograms for the period under review.

Specific regional figures underscore the broader downturn across major growing zones. In Zone 2, encompassing Gatanga and Kigumo sub-counties, six factories achieved a combined sales volume of 13,913,857 kilograms, with Ngere leading the zone at 3,574,633 kilograms, down from its previous output of 3,859,477 kilograms. In Embu County, the factories of Mungania, Rukuriri and Kathangariri recorded a combined total of 6,713,572 kilograms, dropping from 7,488,969 kilograms in the prior period. Conversely, Zone 9 in the west of the Rift achieved the highest volume among Kenya Tea Development Agency managed factories with 17,052,546 kilograms, while Momul recorded the best auction prices and sold 2,589,276 kilograms.

Market participants and industry stakeholders point to the introduction of a new tea levy by the Ministry of Agriculture as a primary driver behind the reduced volumes. Set at Ksh 2.28 per kilogram, which is calculated at 0.8 percent of the auction value prior to export, the levy has created friction within the supply chain. Exporters report that international buyers from key destination markets such as Pakistan, Egypt, the United Kingdom, the United Arab Emirates, Russia and Kazakhstan have pulled back due to the resulting cost increases. East African Tea Trade Association Managing Director George Omuga noted that smallholder farmers continue to anchor the market, with the Kenya Tea Development Agency supplying 70 percent of the teas traded at the facility.

In defense of the regulatory adjustment, Tea Board of Kenya Chief Executive Officer Willy Mutai explained that the financial collections from the levy are earmarked for critical industry interventions. These include funding a tea price stabilisation fund, supporting sector research, and upgrading agricultural infrastructure. Meanwhile, Kenya Tea Development Agency Holdings Chairman Enos Njeru praised farmers for maintaining stringent quality standards on handpicked green leaves. Njeru confirmed plans for early fertiliser application to tea bushes to bolster future production volumes, while Ngere Factory chairman James Githinji reaffirmed growers' dedication to meeting the quality benchmarks demanded by international buyers.

Why This Matters

The contraction in auction volumes highlights the delicate balance between domestic fiscal policy objectives and the global competitiveness of agricultural commodities. When regulatory interventions introduce additional costs into export-oriented supply chains, international buyers possess the flexibility to moderate demand or source from competing origins. For economies heavily reliant on agricultural foreign exchange earnings, shifts in export volumes carry direct implications for trade balances and the stability of rural economies. Price stabilisation and infrastructure funding are vital for long-term sector resilience, yet the immediate friction experienced by exporters demonstrates how quickly statutory costs can alter buyer behavior in international markets.

Furthermore, the reliance of the Mombasa Tea Auction on smallholder production underscores the systemic vulnerability of localized agricultural networks to macroeconomic policy changes. As institutional stakeholders work to build reserves for research and price support, the transmission mechanism of these levies affects every tier of the cooperative movement, from farm-level collection to final export dispatch. Ensuring that policy measures do not inadvertently suppress trade volumes remains a central challenge for authorities seeking to finance sector development without compromising the market share of smallholder farmers on the global stage.

Opportunities

• Logistics Operators: Opportunities exist to optimize transport and warehousing efficiencies around the Mombasa Tea Auction to help mitigate rising operational costs for exporters.
• Agricultural Input Suppliers: Partnerships can be forged with agencies managing early fertiliser distribution programs to secure bulk supply contracts for tea growing zones.
• Financial Institutions: Cooperatives and regional lenders can develop structured credit facilities to assist smallholder farmers in navigating seasonal income fluctuations driven by shifting auction prices.
• Export Facilitators: Advisory firms can assist international buyers and local factories in streamlining compliance with new levy requirements while maintaining competitive pricing strategies.

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