Kenya mulls tea futures contracts to stabilize prices
Reports suggest that Kenya, the world's largest exporter of black tea, is considering introducing tea futures contracts in an attempt to stabilize volatile prices and offer a degree of income guarantee for growers. New York-based INTL FCStone held talks with industry representatives and prepared a report on the prospect of introducing the derivatives, something the local stock exchange is open to. According to the Nairobi Securities Exchange, tea futures would help growers hedge their pricing risk and attract new investors to the tea market. The average auction price for Kenyan tea has recently been extremely volatile, surging by 34% last year, but falling by 22% in 2016. Coupled with increasing production costs, this volatility, which the futures hope to address, has made the sector unattractive for growers and investors alike.