Kenya Tea Development Agency eyes Japanese specialty tea market with construction of US$3m factory

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KENYA – The Kenya Tea Development Agency Limited (KTDA) is in the process of constructing Africa’s first specialty green tea factory worth Ksh. 330 million (US$3m), that will specialize in production of Japanese Sencha Green Tea.

Located at the agency’s Kangaita Tea Farm in Kirinyaga County, the factory will be used to pilot the processing of the specialized tea which on average fetches a higher price in the market than traditional black CTC tea.

“With Kenya being the third largest producer of tea in the world, KTDA is in the process of diversifying the kind of products we are putting in the market; having started with Orthodox tea and now green tea.

“This particular plant will process a special type of green tea called Sencha. When successful, this project will be rolled out to the smallholder tea factories,” said KTDA Management Services Managing Director, Alfred Njagi.

According to reports by KBC, the investment targets the Japanese market and the factory will start operations in the second quarter of next year.

Construction of the new tea factory which started in August last year was expected to end in February this year but due to COVID-19 related disruptions completion date has been moved by at least a year, indicated the report.

“This particular plant will process a special type of green tea called Sencha. When successful, this project will be rolled out to the smallholder tea factories.”

Alfred Njagi – KTDA Management Services Managing Director

The project is a collaborative effort between the Japan International Cooperation Agency (JICA), the Agriculture and Food Authority (AFA) and KTDA.

To finance the initiative JICA injected Kshs 150 million (US$1.38m) into the project while KTDA Holdings is expected to finance the balance to the tune of Kshs 180 million (US$1.66m).

“We are grateful to the Japanese Government for helping fund this project so that we can diversify the products that smallholder tea farmers process in order to ensure that they are cushioned against the fluctuations of black CTC tea prices,” said Njagi.

Production of traditional black CTC tea vs speciality tea

Production of orthodox tea from KTDA factories has risen by 25% in the year ended June 30, 2020, prompted by its diversification strategy.

Production of Japanese Sencha Green Tea comes at a time when Kenya continues to witness a decline in production and export volumes.

Latest data from Tea Directorate indicates that Kenya tea production in July declined to 36.55 million kgs from 46.37 million kgs in June and 47 million kgs in May.

Total export volume during the month under review was 38.55 million kgs, 5% decrease against 40.59 million kgs recorded during the same period last year.

However, KTDA recently announced that production of orthodox tea from factories it manages has risen by 25% in the year ended June 30, 2020, prompted by its diversification strategy.

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According to the agency, the factories produced 2 million kilos of orthodox tea, up from 1.6 million kilos of the previous year.

The increased output reflects the ongoing investment in machinery with 10 factories having installed production lines for orthodox tea processing, out of which 9 are already operational.

The operational factories are Itumbe, Michimikuru, Kangaita, Imenti, Kiru, Thumaita, Gitugi, Kagwe and Chinga.

The tenth factory is Kimunye and will soon be commissioned to commence processing.

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