The ongoing post-election violence in Kenya has forced the Rwandan tea authority (Ocir-The) to call off this week’s tea auction in the Kenyan port town of Mombasa.

However, Ocir-The Director General, Alex Kanyankole, said this would not affect their profits since they expect to generate more revenue should the auction resume next week.

Since 30th last month, Kenya has faced deadly violence which has claimed over 300 people, displaced hundreds of thousands and paralysed business.

Kanyankole said that since the violence erupted, Rwanda stopped transportation of tea to Mombassa for export.
He however said that the government is already losing due to the suspension of the auction.

"It’s too early to claim loss. That can happen only when the violence exceeds two weeks, Kanyankole said.

He instead said that they expect a higher demand for Rwandan tea when the auctioning activities resume next week.

"We have only missed two days for auctioning, but we are predicting an increase in our (tea) price because of higher demand that will be in auction market next week. We shall resume our auctioning when our clients are so eager to purchase more of our tea”, he adds .

The director said that prices are determined by forces of demand and supply. Auctioning of tea in Mombassa is done on every Monday and Tuesday.

Kanyankole further said that tea prices per kilogramme during the previous auction in Mombassa ranged between $1.6 (about Frw 864) and $ 2 (about Frw1080).

About 70 percent of Ocir-The tea is sold via the weekly Mombasa tea Auction and the rest 30 percent is by direct sales to importers and even domestic buyers.

Recently Philbart Munyandinda, the budgeting officer of OCIR-THE, said that last year tea fetched over $25.2m compared $21m and $18m in 2001 and 2000 respectively.

 "So far total revenue collection from Tea in 2007 is $16.9m up to the month of September and is expected to reach a record mark of $40.2m in 2008,” he explained.

He attributed the increment in revenue to their efforts to increase productivity and expand tea plantations as well increasing the capacity of tea factories in the country.

"We expect to make more investments next year in tea plantations and capacity increase in factories at Mushubi, Karongi and Bweyeyi,” he said

In the 2008 budget, the government plans to increase productivity and marketing in the tea sector.

It is believed that productivity on the existing plantations will be improved through better inputs and increased supervision and support to plantations, and through the expansion of the area of tea plantation.

It is also indicated that the international market prices for tea are expected to incline moderately over the medium term, and so it is the increase in output that will be the major factor in the 12.5 percent average annual increase.

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