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Humans · Economy

What lies at the bottom of an English cup of tea?

August 28th, 2017
in:Humans, Economy
by:Federica Tedeschi
located in:Kenya, United Kingdom
tags:East African Tea Trade Association (EATTA), Mombasa, Nairobi Securities Exchange (NSE), tea sector

Tea is an essential part of everyday life for most people in the United Kingdom. No wonder that Britain is the second largest per person tea drinking nation; second only to the Republic of Ireland.

Data disclosed by the UK Tea & Infusions Association reveal that the UK inhabitants drink a whopping 165 million cups daily.

Where does the refreshing content of so many tea bags and loose tea packs come from?

Although the use of this much-loved drink spread from its Asian homeland reaching Europe in the sixteenth century (and more specifically England a few decades later), most of the tea currently consumed in the UK comes from an auction in the coastal city of Mombasa in Kenya. Almost 47 million kilograms of this product reached England last year, at a total cost of over £2.7 million.

The African country, which is the third largest producer of tea in the world and the main exporter of black tea, is also home to the East African Tea Trade Association (EATTA), a voluntary membership organisation established in 1957 to bring together tea producers, buyers, brokers, packers and warehousemen. EATTA aims to ensure the orderly sale of tea and the centralisation of its trade in East Africa, promoting close industrial relations in the field and facilitating the settlement of dispute within the trade itself.

“Tea has been one of the key commodities that has kept the economies of the East African regions running soundly in the contexts of foreign exchange and employment. It has also been improving the standard of living of the farmers and the business people across the value chain”, according to EATTA managing director Edward Mudibo.

The Mombasa market, which is dominated by a few large buyers, is very competitive with some clients changing hands for just a few cents difference in price. The auctioneer’s duty is therefore to meet his clients’ requirements as efficiently and as advantageously as possible, or risk losing them to more competitive sellers.

The 2014 public outcry over low prices caused by the excess of supply over demand of tea is currently over. In fact, “prices of tea are kept stable at an average of $2.10 for each pallet”, confirmed Mr. Mudibo.

One of the strengths of the auction system, which takes place twice a week in Mombasa, is the transparency about who is buying and at what prices, as all related information is set forth in a public forum.

On the contrary, the whole process of tea production can hide several difficulties affecting the tea farmers.

Thousands of East Arica tea pickers have gone on strike since 2010 to protest the use of tea plucking machines and the employment of new people to use such machinery; this is only the tip of the iceberg.

EATTA has been working hard alongside its partner Trademark East Africa (TMEA) to ensure gains from the tea trade results in tangible gains for East Africans, while fighting to guarantee farmers their rightful treatment.

Last year the association was delighted to announce the removal of the 1 per cent tea ad valorem levy after having appealed to the Government four years before. Soon after the respite offered by that move, however, tea farmers had to face the negative consequences of the freshly reintroduced income tax.

According to Mr. Mudibo, whilst it is fair for citizens to pay taxes, the farmers who are already struggling to make ends meet while coping with a myriad of levies, should be exonerated from paying the income tax.

Other important measures to put in place regard the VAT of locally consumed tea in Kenya.

As Edward Mudibo highlighted: “We export 95 per cent of our tea, which is not taxed but that 5 per cent which we drink in Kenya is taxed instead. Does it make any sense?”.

The theme of EATTA’s third African Tea Convention and Exhibition (ATCE) event held in Nairobi last May was ‘Sustainable tea farming- an inspiring future for nature, health and rewarding livelihoods’. Fluctuating tea prices along with climate change effects and political instability in key markets have been defined the main causes of tea producers’ uncertainty over their future.

An answer to these problems could be the futures contracts, which the Nairobi Securities Exchange (NSE) is keen on introducing in the tea market, starting from Kenya.

These contracts for assets bought at agreed prices but delivered and paid for later, would allow sellers or buyers to hedge against risk.

While Kenya must improve its competitiveness in the world of tea to take care of its inhabitants, the whole African tea sector needs to collaborate to overcome today’s challenges and be ready to face future hurdles.

Article written by:
Federica Tedeschi
Author
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© Sarah Ross/flickr
The UK has found a way around its cool climate and started producing his favourite beverage. There is a tea estate outside of Truro, in Cornwall and small tea farms have begun to pop up across Scotland, where the Scottish Tea Growers Association was formed in 2016. (Source: worldoftea.org)
The UK has found a way around its cool climate and started producing his favourite beverage. There is a tea estate outside of Truro, in Cornwall and small tea farms have begun to pop up across Scotland, where the Scottish Tea Growers Association was formed in 2016. (Source: worldoftea.org)
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Tea auction in Kenya
Tea production in Kenya
Tea production in Kenya

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