Mombasa Tea Auction Process

The Export Auction System was initiated in November 1956 in Nairobi on a very small scale with only small quantities of secondary grade teas offered fortnightly under the auspices of the East African Tea Trade Association (EATTA). The bulk of East African tea production was directly consigned to the London Auctions. The United Kingdom has been the top importer of tea in the world. In time, East African Producer members considered it worthwhile to offer additional volume and quantity in the local export auctions. As quantities increased, the incentive for international buying concerns to open up offices in Kenya grew. Gradually, more international buyers were attracted, spreading interest to markets other than the U.K. In 1969 it was decided by both Producer and Buyer members of the Association that, as tea was mainly warehoused, handled and shipped from Mombasa, the Auctions be moved from Nairobi to the Port of Mombasa.

The Auctions are held weekly, on Mondays and Tuesdays. There is presently, a main grades auction held on Tuesdays and secondary grades auction held on Mondays from 9.00 am.The variety of quality and progressively increased quantities offered have made Mombasa the second largest black tea auction centre in the world after Colombo in Sri-Lanka. Unlike India and Sri-Lanka where tea is seasonal, production in this region is all year round. Mombasa has gained a reputation as a centre for some of the best CTC top grades in the world and an international blending floor with teas coming from within and outside Africa for blending. Every major tea producing and consuming country focuses on the weekly activities in this centre to gage the market trends and create benchmarks for their international prices of tea. Due to the success story of the Mombasa auctions, courtesy of the EATTA, more producing countries continue to join the Association.

Presently there are offerings from Kenya, Uganda, Tanzania, Rwanda, Burundi, Democratic Republic of Congo, Malawi, Madagascar, Zambia and Zimbabwe. Producers from as far as New Guinea and Indonesia have expressed their wish to join the Association and have their teas offered in the Mombasa auction. Mombasa is now the only auction centre in the world trading in straight-line teas from more than one country. Quantities have grown by over 300 percent in the last 20 years. This could not have been possible without the tight checks and controls in the whole system. These checks range from setting minimum standards to severe disciplinary action against errant members of the trade as EATTA is often the platform for addressing problems affecting members.

The auctions attract principal overseas interest from the major tea consuming countries in the world with the United Kingdom, Pakistan, Egypt, Afghanistan, Sudan, Iran, Yemen, United Arab Emirates, Ireland, Somalia, Canada and Singapore as the major players. The Buyer representation spreads over more than fifty countries internationally. The Buyer members, by way of obtaining supply contracts, effectively promote and market African tea abroad. With the closure of the London Auction in 1998 the volumes offered at the Mombasa Auctions have considerably grown with an expectant market expansion. Tea Exporters are required to register all Sale Contracts with the Tea Directorate within thirty days of being finalized in a Contract Registration Form together with the relevant export documents.

A certain percentage of tea is sold by Brokers through Private Treaties to Buyer members which is a complementary feature to the weekly Monday Auctions. Teas bought from the Auction or by Private Treaty, in accordance with the Constitution of the Association, may be exported or packed and sold on the local market, in accordance with the Laws of Kenya. Import Duty and Value Added Tax are payable on any Non-Kenyan teas removed from a Warehouse for home consumption.

Sale No. 42 of 26th October, 1992 is fondly remembered as the sale the Mombasa Tea Auction went international by conducting a most successful US dollar auction in accordance with Kenya Government Policy as per Exchange Control Circular No. 5/92/13 of 15/10/92. Although there were a few teething problems, the system entrenched itself within a short while. This is a big step which neither India, the largest producer of tea nor Colombo, the biggest auction in the world, have managed to achieve to-date. All sales are held under the self-regulating rules and regulations of the EATTA which ensure fair play. Trade is between members. Auction sales are numbered on an annual basis starting with Sale No.1 on the first Monday in January and ending  with sale 50 or 51 in December.

The Association regularly works towards further improvements in warehousing, handling, shipping and communications in order to attract the international buying support that is so essential for the success of the East African Tea Trade. The largely unexplored opportunities in the value added export market are an area for the Packer members to address. The Government is encouraging growth in this sector with facilities such as export processing zones. Other incentives such as VAT and import duty exemptions on packaging machinery and materials, soft loans and tax holidays will greatly enhance activity in this area.

The activities of the Association are driven by a Board of directors, which meets quarterly. The Board comprises six Producer representatives, three Buyers, one Brokers and one Warehouse and one packer representative elected each year in rotation at an Annual General Meeting. In turn, the Board elects a Chairman and Vice-Chairman and appoints Committees to transact its business on its behalf.  The Association has functioned effectively through four committees each chaired by a board member.

To take care of their sector's special interests, the different categories of members have formed their own Sub-Associations under the umbrella of the EATTA. These are the Tea Buyers', Tea Brokers', and Tea Warehouses Associations.

The day to day administration of the Association is provided by a Secretariat based at the Tea Trade Centre on Nyerere Avenue, Mombasa where the two auction centre are housed. The Secretariat compiles and circulates statistical information and trade enquiries to assist members in their sales operations. Minutes of all Association meetings are recorded and filed at the Secretariat, which operates on funds raised from members' annual subscriptions.

Regular consultations and meetings are held between the various related central government Ministries, departments and other allied trades such as the Kenya Ports Authority, the Shipping lines, all in the interest of the tea trade in the region. The Association's Board  works closely with the Tea Board of Kenya, which is the apex of the Industry in Kenya. A Tea Convention held after every two years, is organised by the  EATTA.