Tanzania, a mid-tier East African tea producer, announced ambitions to significantly increase production and begin laying the groundwork for a regional auction to compete with Kenya’s Mombasa Auction, the second largest in the world.
The country named five growing regions to target, including Njombe where Unilever Tea Tanzania (Lipton) recently completed a Sh18 billion ($7.8 million) factory upgrade. The factory buys 70 percent of its green leaf from local smallholders. The remainder is grown on a 1000-acre (400 hectare) estate. The other regions include Iringa, Mbeya, Tanga and Kagera.
Tea is cultivated on 56,000 acres (22,721 hectares) with plans to expand to 62,000 acres (25,000 hectares) during the next five years.
The tea auction at Mombasa sells, warehouses, and ships most of Africa’s tea including 5,000 to 8,000 metric tons of mainly black tea from Tanzania. To succeed, a rival auction in Dar es Salaam must warehouse and ship significant quantities of a variety of tea. The coastal city of 4.3 million is a fast-growing former capital of Tanganyika, a British colony known as German East Africa during World War I. The country gained its independence in 1961.
Since volume is critical to success, the auction would likely invite producers in adjoining Zambia, Malawi, Mozambique, and Zimbabwe to participate, saving growers transportation expenses. The distance from Harare, Zimbabe to Mombasa is 2,800 kilometers and the trip takes 45 hours. Mombasa currently attracts 70 buyers from 50 countries with tea offerings grown in 10 countries. It is the only tea auction that accepts tea from more than one country. Uganda briefly considered establishing a national tea auction in Kampala but has since rescinded the decision. Tea shipped from Kampala to Mombasa travels 1,200 kilometers and takes 21.5 hours.
Othieno Odoi, a senior planner in charge of trade at Uganda’s National Planning Authority, voiced a common complaint: “Once our tea is exported through Mombasa, it loses identity because it lacks the proper packaging. This means it inherits Kenya as the origin in the export market, losing its identity to the advantage of Kenya,” he said. Uganda sold 30,000 metric tons of tea in Mombasa last year. Rwanda sold 10,000 followed by Tanzania, Burundi, Mozambique, Ethiopia and Madagascar.
Steven Mlote, chairman of the Tanzania Tea Board told The East African, “We had discussed with tea stakeholders our plan to establish a tea auction in Dar es Salaam with positive support from key business executives in the tea industry.” A local auction will boost farmers’ earnings, he added.
Tea sold by Tanzania earned an average $1.65 per pound last year while Rwanda tea averaged $2.97 per pound in Mombasa.
Construction of warehouses for bulk tea storage is planned as well as other infrastructure improvements in hopes of getting better prices than for Tanzanian tea sold in Kenya. The minister of agriculture seeks to improve productivity of traditional cash crops including coffee, cashews, cotton, tea, pyrethrum, and sisal.
About half of the Tanzanian land under tea (11,272 hectares) is farmed by big estates with 11,449 hectares owned by growers who produce tea for export.