Kenya: The Government says it will speed up implementation of an electronic tea auction to increase transparency and efficiency.
Agriculture, Livestock and Fisheries Cabinet Secretary Felix Koskei said the ministry is working with the East African Tea Traders Association (EATTA) towards the full implementation of an e-auction system to address the issue of declining tea prices.
“The process of preparing for automation had long began and was 95 per cent complete with only five per cent on the way to completion,” Koskei said in Mombasa late on Tuesday.
“I have also noted with appreciation that the live streaming of the auction has been achieved and currently live proceedings of the process can be viewed globally. It however, needs much publicity and availability to the smallholder.”
EATTA that runs the auction at the Tea Trade Centre says the move will provide transparency in the way bids are communicated. The e-auction process has entailed installing web cameras that will stream auction proceedings live to all authorised stakeholders. The process is expected to be completed in April 2015. The auctions have been available online since August 25, with the net-cast capturing buyers’ bids and the accepted final bids by brokers.
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The EATTA-run Mombasa tea auction is one of the largest black tea exchange centres in the world, with 32 per cent of the tea exported to the world passing through it.
Koskei said an automated system will deliver the advantage of a better price discovery system. “This has indeed been the case with some of our competitors who have already implemented this system.
An automated auction system will further restore the confidence of the producers on the integrity of the auction process and remove the perception by the general public of lack of transparency,” he said.
Prices are cyclical
He revealed that the Government has included small holder tea producers in the fertiliser subsidy program to cushion them against the high cost of production. The CS said the importance of the tea industry cannot be underestimated with a contribution of 4 percent to GDP and Sh114 billion in returns to the industry, disclosing that the government is keenly interested in the development in the industry with the view of offering positive interventions and solutions.
EATTA Managing Director Edward Mudibo confirmed their commitment to the implementation of the e-auction system which will be rolled out by April 2015.
He said Kenya experienced high production towards the fourth quarter of 2013 and that the upward and downward trend in tea prices are cyclical, depending on supply and demand.
