Tea Stacking Up

In Kenya, they have the world’s biggest tea auction. Kenya is also the world’s largest black tea exporter according to our source today at Bloomberg.com. But it looks like Kenya is having a little problem regarding their tea right now and it’s the world economy that is affecting it.

The warehouses in Mombasa are filling up with tea because the buyers, mostly from the Middle East, Pakistan, and Sudan can’t get financing papers. Bloomberg tells us that of all the goods traded around the globe, 90% rely on letters of credit and other financing or guarantees. This is coming from the director of the World Trade Organization. who says this type of financing is drying up and its associated cost is rising.

What this means is that tea is not being bought because the buyers in many countries simply cannot get financing for the purchases and it’s is costing them more for the financing they can find. Meanwhile, the tea is piling up in the warehouses where it can only be stored for two years, all the while becoming less valuable.

Source: Kenya Tea Stockpiles Expand as Buyers Struggle to Finance Trade