Kenya Strives to Craft a More Competitive Tea Sector

A Senate bill to establish a Tea Regulatory Authority and make licensing of tea farms mandatory is making its way through Kenya’s legislature with support from President Uhuru Kenyatta. Industry, Trade and Cooperative Cabinet Secretary Peter Munya said last week that the proposed law would restrict exports of raw tea and coffee to “compel players in the two sectors to make value addition a part of their production processes.” Speaking in Nairobi at the launch of Faraja Tea, a new Sudanese premium tea brand, Munya said “A vibrant value addition sector will open up vast opportunities for job creation along the value chain while increasing earnings for farmers and tea exporters, which will, in turn, generate more revenue to the exchequer.” Munya praised Faraja Tea owner Cofftea Agencies, a global conglomerate and the third-largest buyer of Kenyan raw tea, initially blended and packaged in Khartoum, Sudan. The company now purchases 600 metric tons per month for processing in Mombasa where it competes with Fahari ya Kenya, a brand marketed by the Kenya Tea Packers Ltd. (KETEPA), a KTDA affiliate that accounts for 86 percent of local sales. “Kenya’s tea potential is largely unexploited and that is why something has to be done,” said Munya, who hopes to cut the amount of bulk tea exported to other countries where it loses its identity. President Kenyatta asked for a review of the Kenya Tea Development Agency (KTDA) in 2016 following a disruptive period of volatile pricing, falling yields and global competition for crush, tear, and curl (CTC) tea. Kenya exports about 25 percent of the world’s black tea. The authority, if approved, would “regulate the operations of tea growers and processors, license tea dealers, those managing factories and their agents and tea brokers.” The authority would be in Kericho County according to Kericho Sen. Aaron Cheruiuot.

“Every processor shall keep statistical records of all tea growers registered with specifying the name of the grower, the location, size and parcel number of the land on which the tea is grown, and the variety of tea grown,” the bill stated, according to reports in The Star. Kenya produced 440 million kilograms of tea during the 2017 harvest year and is expected to increase that total to 488 million kilograms in 2018. KTDA provides a long list of services to 565,000 small tea farmers including agricultural extension, transportation, factory oversight, and marketing. KTDA was established in 1964 to promote and foster the development of small-scale tea farmers. It co-existed with the Kenta Tea Development Authority, later renamed the Kenya Tea Development Agency in 2000. KTDA is owned by farmer members who elect representatives to supervise a sprawling structure of subsidiaries. These include KTDA management services which operate 66 tea factories; a power company to invest in and manage hydro power projects, KETEPA which blends, packages, and distributes tea. Ancillary services include a micro finance company and KTDA Foundation, a non-profit affiliate that champions corporate and social responsibility activities. KTDA growers produce 60 percent of the country’s tea. KETEPA recently opened its first tea and coffee house in Nairobi and is developing teas for export. Source: The Star, The Standard