Malawi’s tea auction market in Blantyre will soon become a regional tea market hub following plans by three neighbouring countries to start selling their commodity in the country, local tea industry officials have said.
Tea is one of the country’s top three foreign exchange earners, and last year the crop brought in K16 billion (US$34 482 759) in foreign exchange earnings, up from the previous year’s K10.7 billion (US$23 060 345).
In the year up to October, the crop’s output is at 40.6 million kilogrammes (kg), trading at an average price of $1.30 (K621) per kg, raking in $52.7 million (K25.2 billion, at the current exchange rates).
Industry officials say the biggest tea auction centre in Africa is Mombasa Tea Auction in Kenya with Limbe Tea Auction, established in 1970 along Kidney Crescent in Blantyre, being second.
Tea Association of Malawi (Taml) chairperson Sangwani Hara said in an interview on Saturday they welcome the development because “critical mass in business is important”.
He said in terms of volume, Mombasa trades between 350 million kg and 400 million kg of tea whereas in Malawi, the market only trades around 45 million kg.
This also means that in terms of buyers, Mombasa has more compared to Malawi.
“The idea is if we get Mozambique, Zambia and possibly Zimbabwe to come and sell on the Malawi auction floors, then we will be creating a critical mass to attract the needed buyers to offer the competition that we need on the auction market,” said Hara.
Currently, the tea industry has a two-tier marketing system, primary and secondary with the former trading in green leaf from smallholders while the latter involves made tea known as black tea which is eventually sold at Mombasa Tea Auction.
A huge consignment of Malawi’s tea [98 percent] is exported, with only two percent consumed locally, a situation that has been a concern for the tea industry for some time.
Trade analysts say the setting up of a regional tea market will encourage production because the number of buyers will increase; hence, pushing up demand and sales of the commodity.
Currently, there is a deficit in the supply of tea on the global market with Kenya leading the pack with production of 60 million kg.
Hara said the regional tea market hub in Malawi is a boon for transporters and business operators who have warehousing facilities which will bring in a multiplier effect.
“Obviously for tea to sell here, we need to determine where the position of that tea needs to be. If that position is Malawi, then transporters will benefit because tea has to come to Malawi, warehousing facilities will also benefit.
“Then there is a trickle-down effect; if one industry benefits, there is always a trickle-down effect in terms of the associated industries, there is a multiplier effect,” he said.
Not only is tea an important source of foreign exchange, but the industry also provides numerous opportunities for jobs and generates wealth through its value chain.
Figures show the industry has a total labour force of between 50 000 and 60 000 and is one of the largest private sector employers of labour with benefits trickling to over half a million people in the tea growing areas and beyond.