Increase in Tea Production and Strategic Changes in Kenya’s Tea Sector

Principal Secretary Kipronoh Ronoh has announced a notable increase in tea production for the Financial Year 2023/2024. This rise in production has led to a larger stock of unsold tea at smallholder factories, a situation that is prompting strategic responses from both the government and industry stakeholders.

Ronoh revealed that the surge in tea production is largely attributed to several factors: the fertilizer subsidy introduced by President William Ruto, favorable rainfall patterns, and an increase in the number of tea farmers. These factors have collectively boosted tea yields, but have also led to a buildup of unsold tea, particularly in smallholder tea factories managed by the Kenya Tea Development Agency (KTDA).

Speaking at the East Africa Tea Trade Association (EATTA) meeting in Mombasa, Ronoh addressed the challenges associated with this surplus. He clarified that there is currently 100 million kilograms of unsold tea in various factories. This figure is significantly lower than the previously reported 400 million kilograms, a discrepancy that has caused market anxiety. To alleviate these concerns, Ronoh emphasized the need for accurate information and urged tea traders to avoid spreading unverified claims.

To address the surplus and improve the efficiency of the tea market, Ronoh outlined several strategic measures. One of the key strategies includes enhancing local sales by encouraging brokers and buyers to purchase tea domestically. This initiative aims to clear the existing stock within the next month.

The government also plans to amend the Tea Act of 2020 to facilitate Direct Sales Overseas (DSOs) by all tea producers, including KTDA-managed factories. This change is intended to open new markets for Kenyan tea and boost international sales. Furthermore, all tea producers will be required to adhere to a tea quality standard of at least 65 percent to address the declining quality issues that have affected Kenya’s tea reputation.

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In addition to these measures, the government is advocating for diversification in tea production. Producers are encouraged to shift from traditional black CTC tea to include orthodox and other varieties in the tea auction. This diversification is expected to enhance the market appeal of Kenyan tea and create new opportunities for value addition.

Ronoh highlighted the importance of increasing the value addition of Kenyan tea from the current five percent to over 22 percent. To support this goal, the government plans to establish a Common Use Facility (CUF) for tea value addition and implement fiscal incentives such as tax exemptions. These steps are aimed at encouraging tea producers to enhance their processing capabilities and improve the overall value of Kenyan tea.

The government will also boost marketing efforts by signing Memorandums of Understanding (MOUs) and bilateral agreements with key international markets. These agreements are designed to enhance Kenya’s tea market access and promote the country’s tea on a global scale.

Ronoh also praised the cooperation of tea farmers, especially during the recent tea sector elections held in July. The new directors appointed during these elections have already assumed office and are working to implement the sector’s strategic plans. A list of these new directors will be made public soon to ensure transparency and public awareness.

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The meeting, which included representatives from KTDA, EATTA, tea buyers, and brokers, was a crucial platform for discussing the future of Kenya’s tea sector. With these new initiatives and strategic changes, the government aims to address the current challenges, optimize tea production and marketing, and enhance the overall value of Kenyan tea in the global market.