recent trip to S. Yunnan, wild vrs cultivated leaves

I found the tea trade remarkably undeveloped. I met a few family based traders, and while I enjoyed talking with them, I did not find gems of tea emerging from their larders. That said the land changed making a loop south from Kunming, to Simao-Puer, then west to Meng-hai, then Northwest up through Lancang to Lincang and east back. Lancang had the most striking landscape, and bordering as it does, I imagine the wild trees here to be of interest, their fruity, sour taste intriguing, as well as the difference in the leaves - the darker, wild leaves are not serrated and are thinner than the "cultivated" kind. This distinction offered by a Lancang native is problematic, as she claimed some cultivated trees were planted in the three kingdoms era, which would date them nearly a thousand years back. She dated them at 300 years back.

ft on african auctions

The auctioneer patters, the bids fly, the banter sharpens, the tension rises. Just a few seconds have passed, then bang. The hammer strikes and the package is sold. On to the next one.

It’s a rapid-fire process repeated thousands of times every week in the Kenyan port city of Mombasa, where east Africa’s tea crop is sold in an auction so fast, a deal can be done in the space of an ill-timed sneeze.

What traders do has global implications because Kenya is the world’s top black tea exporter and the auction, which handles tea from the rest of east Africa too, is the world’s largest. For those reasons, Mombasa has become to tea what the New York Mercantile Exchange is to oil and the London Metal Exchange is to copper: the place where a global benchmark price is set.

That’s why the world cared last week when average wholesale prices for the best black tea, broken pekoe 1, jumped to an all-time high of $3.97 a kilogramme, up almost 40 per cent since January due to the impact of droughts on global output.

With so much at stake, the Mombasa traders sit poised in a predatory arc around the auctioneer, showing off the sharp shirts, chunky watches, quick minds and killer instincts common to commodity trading floors across the world.

Tea port plucked from obscurity

Kenya’s tea auctions have evolved from their humble start half a century ago, when the country was just a secondary market for tea not consigned for the London auction, the centre of tea trading for most of the last century. Now Kenya has become the world’s largest auction, pricing more than 35 per cent of global tea exports, writes Javier Blas.

London has retained its leadership on the tropical commodities that developed exchange-traded futures – sugar, cocoa and coffee. Kenya auctions started in November 1956 in Nairobi and moved in 1969 to the port city of Mombasa. Rising tea imports around the world reinforced Mombasa’s position, leading to the closure of the London tea auction in 1998.

The introduction of bidding in US dollars in 1992 was a catalyst for Mombasa’s development, as it mitigated the risk of a devaluation of local African currencies. That was particularly important as the auction was by that stage handling the produce not only of Kenya, the world’s largest tea exporter, but also of eastern African countries, including Uganda, Burundi, and Rwanda.

In addition to Mombasa, there are auctions in Colombo in Sri Lanka, handling about 25 per cent of the world’s exports; Kolkata and Guwahati in India, accounting for 15 per cent; Jakarta in Indonesia; Chittagong in Bangladesh and Blantyre in Malawi.

But while they need the traditional wiles and wits of a hustler, that is only half of the job for members of the East Africa Tea Trade Association. They must also have the refinement of a wine connoisseur.

Why? Because although every commodity trader needs to know the science of his asset, tea is a subtle creature whose varied tastes can only be appreciated after years of palate practise by the men, and a few women, in Mombasa.

They must be as soft tongued as they are hard nosed. They spend as much time swilling tea in their mouths – their version of price discovery – as they do buying it. A better name for their profession would be taster-trader.

And their decisions affect the retail prices paid by drinkers of sweet brews in Cairo, milky cuppas in London and iced tea in Los Angeles.

While coffee, cocoa or sugar come in just a few standard grades and trade on futures exchanges in London and New York, tea pricing is a more delicate art, better suited for an auction, because “every lot is different”, says Naveed Ariff, general manager of Global Tea & Commodities, a trading company in Mombasa.

Quality varies according to the rainfall, altitude, soil nutrients and plucking standards of each estate. “Tea processed in the morning can be different from tea processed in the afternoon,” says Mr Ariff. “Every factory will have seven or eight grades. And there are hundreds of factories.”

The biggest producers in Africa are James Finlay, Unilever and the Kenya Tea Development Authority – which represents half a million individual farmers – and each one delivers tea from its rural factories to a selling broker in Mombasa.

The broker sends samples of each batch to several dozen buyers two weeks ahead of auction. That is when the taster-traders head to the laboratories, where they quaff them and decide how much to bid on behalf of the world’s tea retailers.

Unilever is a buyer as well as a producer, and its taster-traders sample 1,500 tea packages a day for four days a week. One of them is Nimrod Taabu, who moves down a line of cups making a violent slurping noise as he sucks up tea from a spoon.

The technique ensures the tea spreads around his mouth so he tastes not just with his tongue but with his inner cheeks, the roof of his mouth and his throat. The noise, he concedes, “is definitely something the Queen would not be proud of”.

He spits the tea into a basin after four or five seconds, but in that time he can identify faults – like a weed caught up with the leaves – and assess viscosity and “dissolved solid content”, “mouth feel” and “floral tones”.

Armed with their conclusions, the taster-traders then head to the auction where 11 selling brokers take the auctioneer’s seat in rotation and read out offer prices for their 40kg and 60kg packages. Last week, a total of 5m kg was on sale.

When several buyers want the same tea – and on this occasion the strongest demand is for high quality – they will yell “up, up” to bid two cents higher. For less popular teas, a buyer will start with a bid several notches below the offer price.

Sometimes no bids come in at all. “Then we’re sweating in there,” said one auctioneer. “Because that means your package has no value in the international market.”

Francis Kiragu, chairman of the East Africa Tea Trade Association and a Unilever director, says traders need to be able to read each others’ strategies. “The competitive edge is whether you can formulate your blend at a better price than your rivals so you can undercut them in the market place.”

The auction can get boisterous, but it never descends into a screaming match. India’s tea sales are different, says Mr Ariff: “By the time you come home every day, your throat is gone after all the shouting you’ve done.”

In Mombasa, however, throats need to be preserved for tasting, because as Mr Kiragu says: “That is the point where you get it right or wrong.”