KENYA – The Kenya Tea Development Agency (KTDA) is planning to install specialty tea processing units across 32 factories under its management at a cost of Ksh 10 billion (US$65.88 million) in an effort to reap more for this highly lucrative sector amid declining revenues in traditional loose leaf black tea.
“In pursuit of management mandate and to maximize returns, KTDA-MS has embarked on product diversification through the installation of orthodox tea processing machinery as an additional production line to the black CTC lines currently in place,” KTDA said in a statement.
The agency is currently seeking proposals from lenders for the provision of financing for the project which also includes the acquisition of automated withering machines.
“The financing facility required for the rollout of the 32 projects is approximately Ksh 10 billion or equivalent in US dollars,” KTDA said.
The private holding company owned by more than 600,000 smallholder farmers across the country has already installed such processing units in 11 of its affiliated factories.
“KTDA has also facilitated the installation of automated withering machinery across the managed factories which have significantly reduced operational cost and increased processing efficiency in the factory,” it added.
The move comes at a time when global tea prices have been declining in the face of increased supply from major producers and exports and weakening demand by key importers, including Iran.
According to a report by Business Daily, tea prices have dropped from US$2.68 per kilogram at the start of 2022 to US$2.25 in September.
The World Bank in its latest commodity markets outlook has predicted a further dip in prices of tea by two percent next year reflecting robust leaf supplies from Indian and East African producers.
This is expected to adversely impact Kenya as tea remains a major forex earner for the country with earnings from tea exports growing 13.54 percent in the first eight months of this year to Ksh 120.13 billion, Kenya National Bureau of Statistics shows.
As a countermeasure, KTDA which manages 54 factory companies across the country is moving towards the high-earner specialty team market segment.
Recognizing the untapped opportunity of specialty teas, the Tea Board of Kenya in collaboration with the Tea Research Institute is also setting up an incubation center for value-added tea products.
Daily Nation reports that the board has invited tenders for supplies of machinery and equipment for the center that will be located in Kericho County.
Specific objectives of the project include promoting the establishment of cottage factories for the manufacture of special tea products and the capacity to build enterprises on secondary tea processing, branding, profiling, and packaging.
The Incubation Center will also be tasked with promoting product diversification based on market intelligence and consumer preferences.