MOMBASA, Kenya
Mombasa’s famous tea auction is an elegant old-world institution dating back to colonial times. But with the impending introduction of an entirely electronic auction system, the Mombasa auction is preparing for big changes – and not everyone in the industry is happy about it.
On the global tea market, Mombasa is a giant. The auction sells teas from nine countries, totaling about 20 percent of the world’s exports and moving more black tea every year – around 380,000 tons – than any other auction house in the world.
“Mombasa is the biggest auction center, and the only center dealing in multi-origin teas,” said Peter Kimanga, chairman of the East African Tea Trade Association.
Here, around 70 buyers gather together twice a week to haggle over prices in a decades-old open-outcry auction. It’s a system beloved of buyers and brokers alike. “As a broker, I am able to tell whether a buyer probably has an extra cent or so, because I can see him, I can see his body language. That physical presence is important”, said Tom Muchura, Director of Africa Tea Brokers.
But with the e-auction slated to arrive by 2013, these weekly events are about to become a thing of the past.
Geoffrey Rimbere, the auction’s manager, explains that the new system is necessary to improve transparency and reduce warehousing costs for exporters. “In the world today, if you don’t change you’ll be left behind,” he said, adding that most of the world’s tea auctions today are electronic.
But most buyers are less convinced.
“The Internet connection in this country is very bad, the bandwidth is not that good,” pointed out Aweys Mohamed, a buyer for Juja Coffee Exporters. “What happens when you are bidding some tea and suddenly your connection goes down? What happens to some of the clients? They can bid from anywhere. What happens to the interests of the local companies who are employing local people here to handle all of that?”
Mombasa’s growing prominence is due not only to the high quality of its teas, but also to the quantities it produces. In 2011 Kenya was the third largest tea producer in the world, and with low local demand, the East Africa region exports 95% of its crop. The biggest buyer here is Cargill, buying for Lipton; other major players include Global Tea and Van Rees.
All of this means that when things change in Mombasa, the tea world takes notice. “If Mombasa rises, all the other auctions will rise”, said Kimanga. But, he added, the opposite is also true.
Muchura, who has worked in Kenya’s tea industry for over 40 years, agreed that the transition will not be easy. “By nature I’m conservative, and I’ve known the tea industry in that form all my life. We will miss the way we have operated in the past”, he said.
“But because of the volumes that we are having to trade with”, he added, “I think it is only natural that this change comes about.”
Hilary Heuler is a freelance writer based in Uganda, write her at [email protected].