KENYA – The Tea Board of Kenya has revealed plans to conduct a special audit on the entire tea value chain following growing concerns over the high production costs and its impact on farmer incomes. 

Kenya has long been a major player in the global tea market, with tea farming contributing significantly to the country’s economy and providing employment opportunities for millions.  

“Despite the key role played by the tea sector, this sector has been under threat due to ever-escalating costs of production in terms of labour costs, energy costs, factory maintenance costs, logistic costs, taxation, and general expenses associated with tea making,” said The Tea Board of Kenya (TBK). 

TBK is calling for a special audit to establish the cost parameters along the value chain including farms, manufacturing, and trade. 

TBK said, “The cost of production of Kenya tea is considered high when compared to other tea-producing countries. This is causing uncertainty in the future of tea farming in Kenya. The cost of producing a kilo of made tea in Kenya averages at Sh130 (US$0.90).”

Kenya’s earnings from tea exports grew 13.54% during the year largely attributed to the weakening of the shilling against major international currencies.  

 The average export price of tea, however, suffered a 30% decline over the past 8 years, dwindling farmers’ earnings from the commodity. 

Despite falling revenue from loose black tea, product value addition remains low as most of the tea exported is sold in blended resulting in a loss of identity and the advantage of fetching high price as an origin tea.  

“The visibility of Kenyan tea is low as brand owners in the export markets package the teas in their brands, failing to denote the origin of the tea, a move that would otherwise promote consumer awareness of Kenya as a producer of quality teas,” said TBK. 

So far, only about five percent of Kenya’s tea is value-added, most of which is sold locally. The rest is exported without any value addition, hence lower earnings for the farmer. 

With incomes shrinking against a backdrop of skyrocketing production costs, TBK sees an audit on the entire value chain as the first step towards protecting incomes of the thousands of smallholder farmers who depend on tea.  

The regulator noted that the audit will provide an objective basis for controlling costs at each stage of the value chain. 

Rise of specialty tea 

Despite the challenges in the tea value chain, the rise of specialty tea brings new hope for tea farmers as the tea market is set for a major shakeup in the face of new investments into factory lines and incubation centers. 

TBK plans to build an incubation hub for specialty and value-added tea as part of an initiative to boost farmers’ earnings from the beverage.  

Kenya Tea Development Agency Management Services Limited (KTDA-MS) which manages factories on behalf of small holder farmers is also aggressively pursuing the value addition agenda with processing units set to be installed in 32 factories across the country. 

“In pursuit of management mandate and in order 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,” said the tea agency.