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Tea earnings post better returns ] last year

The Tea industry recorded the highest export earnings ever of Kshs.180.57 billion last year a significant increase from Ksh.. 138.09 Billion recorded in 2022 and 136.59 Billion in 2021.

The increase was supported by high volumes, stable prices and favorable exchange rate to the US dollar.

According to the released Tea industry performance highlights of last year , the industry annual earnings increased by Ksh 42.48 billion from Ksh 138.09 Billion registered in 2022 production year accounting a 31 per cent.

Speaking during  the release of the 2023 Tea  performance at the Tea Board of Kenya (TBK) headquarters (Tea House), Deputy President Rigathi Gachagua, said  that during the year, a further, Kshs. 16.4 billion was generated from the sale of tea in the domestic market thus resulting in a total marketed value of Kshs. 196.97 billion.

“ The industry also recorded good production with the crop for 2023 hitting a record high of 570 Million Kgs compared to 535 Million Kgs in 2022”, he said adding that in this Financial Year (2023/24), it is envisaged that the income to smallholder tea farmers will surpass the performance of the last two years.

Gachagua noted that the Government will continue to implement the necessary reforms to enhance its competitiveness and increase returns to growers in line with Bottom-UP Economic Transformation Agenda (BeTA).

During the meeting, The DP directed the Cabinet Secretary for Agriculture to work  together with his office to complete implementation of other reforms particularly those addressing the increasing cost of production, green leaf malpractices like tea hawking, increasing stocks of unsold teas, declining quality of Kenya tea, poor governance in the management of the smallholder tea sub-sector, low levels of value addition and product diversification and depressed prices.

Gachagua confirmed  that over and above the stated driving factors, the National Government has since the second half of 2022 aggressively fast tracked implementation of key reforms targeting to confront challenges facing small scale tea farmers.

various specialty teas

“ The Government BeTA has prioritized increasing the level value added tea exports from 5 percent  in 2023 to 50 percent  by 2027. This is expected to increase in the value of tea exports from 180.57 billion in 2023 to over 272 Billion by 2027 and earnings of smallholder tea farmers from the current average of Kshs. 59.02 in the FY 2022/23 per Kg. of Greenleaf to Kshs. 90 per Kg. by 2026/2027 FY”, Gachagua said .

Agriculture and Livestock Development Cabinet Secretary Mithika Linturi said the ministry has received the National Treasury approval of a concept note to incentivize tea value addition through the establishment of A Common User Facility (CUF) in Mombasa (Dongo Kundu SEZ) in line with the Kenya Vision 2030. Alongside the CUF, which is mainly targeting value addition by MSME exporters,

He called upon the Deputy President to  support the ministry   implement the 11 interventions contained in the Concept Paper to spur value addition in tea to the desired level of 50 percent  by 2027.

Linturi noted that stakeholders in the tea industry are happy with the Government support towards value addition and product diversification especially with the  zero-rating of VAT for teas meant for value addition through the Finance Act, 2023 that is expected to spur packaging of tea before export which will in turn contribute to increase in export earnings and job opportunities for the  youths.

According to the performance report, during the review year the total export volume increased by 16 per cent (72.58 Million Kgs) from 450.33 Million Kgs recorded in 2022 to 522.92 Million Kgs.

The tea export unit price was slightly lower in dollar terms at USD2.47 (Ksh354) per Kg compared to USD2.62 (Ksh 375.97) in the previous year.

However, due to favourable exchange rate to the dollar at USD139.85(Ksh20, 068.50) compared to USD117.87 (KSh16, 914) in the previous year, the unit price was much higher at KSh345.32 compared to KSh306.64 in the previous year.

Pakistan during the year maintained its position as the leading export destination for Kenya tea having imported 209.59 Million Kgs, accounting 15 per cent increase compared to 181.98 Million Kgs imported during the year 2022. Pakistan imports from Kenya accounted for 40 per cent of the total export volume, whose value was Sh75.22 Billion.

Kenya tea was shipped to 92 export destinations compared to 82 in the year 2022. Apart from Pakistan, other key export destinations for Kenya tea were Egypt whose import volume was 65.89 Million Kgs (Sh22.05 Billion), UK imported 46.14 Million Kgs valued at Sh14.67 Billion, and Sh28.61 Million Kgs was exported to UAE earning Sh10.15 Billion.

Other export destinations include Yemen which imported 22.69 Million Kgs valued at Sh9.11 Billion, Russia (18.34 Million Kgs valued at Sh5.25 Billion) and Iran (12.40 Million Kgs worth Sh4.28 Billion among others.

Locally, during  the year 2023, cumulative sales in the local market was slightly higher at 37.3 Million Kgs against 36.50 Million Kgs for 2022 but lower compared to 38.42 Million Kgs for the year 2021. During the year, the sale of tea in the domestic market generated a further Kshs. 16.4 Billion.

 By  Wangari Ndirangu

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