Tanzania’s Agriculture Ministry aims to triple the nation’s production of tea to 90 million kg by 2030, partly by replanting and increasing irrigation.
Agronomists in 1904 advised settlers in German East Africa — a vast colony encompassing what is now Burundi, Rwanda, mainland Tanzania, and part of Mozambique — to “think big” and clear large tracts of virgin rainforest in the Usambara Mountains and in Rungwe. After Germany left, British planters began establishing tea estates there in the 1920s. Tanzania became independent in 1961.
Today it is the third-largest tea-producing country in Africa, thanks increasingly to smallholders. Unlike neighboring Kenya, where multinationals own massive plantations like Kericho, an estate that spans 21,500 acres, there are few plantations in Tanzania larger more than 1,000 hectares. Tanzania’s total land under tea is one-tenth of the amount in Kenya.
The sector has 32,000 small growers, each farming less than a hectare, who work almost half of the country’s 24,006 ha under tea, according to the Tea Board of Tanzania. These smallholders collectively produce about 40% of the country’s green leaf. Tanzania’s large estates have 12,445 hectares under tea.
Model factory produces orthodox leaf for sale by specialty retailer Kazi Yetu.
Tanzania’s tea industry once was dominated by large estates. But today smallholders are a major force, and the government is working to increase linkages, integration, and efficiencies among them. The national plan envisions grower-owned cooperatives and clusters of extension-service-trained smallholders supplying nearby factories to minimize the cost of production and improve quality. This will help ensure steady supplies for the regional tea auction and logistics hub that the government is establishing in Dar es Salaam.
Targets
Tea is part of a bigger plan. President Samia Suluhu Hassan in 2020 unveiled an ambitious economic agenda, “Vision 2025,” which focuses on boosting crops to help drive GDP growth to an average rate of 8% through 2025, lifting the economy into middle-income status. The plan invests $2 billion in the transformation of agriculture for food self-sufficiency and export. It will develop irrigation, especially in key farming corridors. The government targets floriculture, viticulture, and farming of high-value cash crops like spices, coffee, and tea.
The initiative will encourage 200,000 young people to pursue careers in agritech — a strategic effort to modernize the farm sector by incorporating technology and innovation.
Permanent Minister of Agriculture Gerald Mweli set a specific target for the tea industry to increase production to 90 million kg by 2029/30. This would represent a tripling of the current annual output of 25 million to 30 million kg.
The success of these initiatives will depend on effective implementation, infrastructure development, adoption of technology, and the engagement and training of many young people in agritech. Planners will need to monitor progress and make necessary adjustments to ensure the desired outcomes.
Tea generated $30 million from exports in 2022, according to Bank of Tanzania figures. It is the nation’s third-largest food export crop. But this is far behind cashews, at $227 million, and coffee, at $161 million. Three-quarters of the tea harvest is exported.
Tea is needed for earning crucial foreign exchange, but the industry “is currently going through several challenges and constraints,” said Theophord Cosmas Ndunguru, director general of the Tanzania Smallholders Tea Development Agency (TSHTDA), a government body established in 1997.
“But the government of Tanzania has started taking very strong and robust measures to make sure that all these challenges are sorted out,” Ndunguru told STiR during a visit to his offices in Dar es Salaam.
Progress
Recent milestones include:
- The launch of a digital tea auction in Dar es Salaam in November. The auction is the centerpiece of a new regional warehouse, blending, and transport hub for the tea trade serving neighboring Burundi, the Democratic Republic of Congo, Rwanda, and Mozambique.
- Creation of several large nurseries that are growing 3.2 million climate-resilient cultivars adapted to year-round, high-yield cultivation. Nurseries at Korogwe (500,000 plants), Lupembe (300,000), Mpanga (600,000), Masebe-Mpugha (600,000), and Lushoto (1 million) will enable tea farmers to replace aging tea bushes and in-fill their plots to increase productivity while also improving quality.
- Continued implementation of Farmer Field Schools, a public-private partnership to promote good agricultural practices that has trained 25,585 farmers.
- Construction of a model factory in Korogwe supplied by the Sakare Coop and producing orthodox whole-leaf tea marketed by Kazi Yetu, a specialty tea company with a tea blending and export facility in Dar es Salaam.
Ndunguru said that his agency operates closely with the Tea Board of Tanzania to address the many challenges facing tea farmers, including large operators. The top concern is climate change. Most of Tanzania is too dry to grow tea. The dry season has expanded from five months in the past to seven months today, which threatens cultivation in the nation’s four tea-growing regions. In every region, growth in the cost of production is outpacing growth in revenue. Inflation and scarcity are increasing the cost of inputs, labor, and transportation of tea. Auction prices and volume on offer are flat or declining.
In response, the government is subsidizing the cost of fertilizer and building 14 pilot irrigation systems to study how best to reduce the stress on crops. The system under construction in Njombe is designed for tea smallholders. “We expect that after the irrigation has started, production will increase by almost 40%. And we hope the tea produced from irrigated land will be of high quality,” Ndunguru said.
Smallholders farm about half of Tanzania’s land under tea.
Replanting
“Most Tanzanian tea is aging. It was planted in the 1980s,” Kemilembe Kafanabo, the Tea Board’s director of regulatory services, told STiR. “The green leaf is not uniform, and productivity is low because, in places like the Tanga region, 50% of the farms have large gaps where plants were uprooted. We encourage replanting with new cultivars.”
Government funds and funding from Agriconnect were used to establish the nurseries, which cultivate mother plants that provide resilient rootstock and cuttings. The 3.2 million mother plants can be used for in-fill and new tracts growing under the jungle canopy.
The transformation efforts are needed because the nation’s tea sector has suffered from a boom-and-bust cycle during the past 50 years. The $30 million earned from tea exports in 2022 is the same level as in 2004, yet far below the $57 million worth of tea exported in 2013. The goal now is to position the industry for steady, solid growth.
20th century legacies
Commercial production of tea began in 1926 under British rule after a defeated Germany relinquished German East Africa, creating present-day Burundi, Rwanda, portions of Mozambique, and Tanzania. When the first tea factory opened in 1930 in the Tanga region (now northern Tanzania), the yields of seed-grown tea on plantations averaged just 600 kg per hectare.
Tanzania, then known as Tanganyika, began exporting tea in 1934, shipping half of the 20,000 kg processed that year to Europe. Starting in the late 1950s, tea farming productivity increased thanks to the removal of shade trees; heavy application of fertilizer (90 kg per hectare), pesticides (paraquat), and herbicides; introduction of clonal tea in 1964; and irrigation systems. Yields rose to 3,000 kg per hectare (1,500 kg per acre). Small farms, by contrast, saw, yields averaging 1,000 kg per hectare, a low level that persists today.
Tanzania emphasized development of tea after it gained independence from Britain in 1961. “The new government took stern measures to introduce tea cultivation to smallholder tea farmers who, before independence, were not permitted to cultivate tea. Through the Tanzania Tea Authority, a state-owned institution, the government planted tea and constructed tea processing factories in Kagera, Rungwe, Njombe, and Tanga Regions,” Ndunguru said.
But the industry collapsed after the government nationalized tea factories and cut funding for tea research. Tea production at big estates fell by 80%. Failing private ventures sold their properties.
The industry transitioned back to private ownership from 1988 through 1993. “During privatization in the 1990s, the government distanced itself from engaging directly in the production sector,” Ndunguru said.
To avert catastrophe, Tanzania appealed to the Commonwealth Development Corp. (CDC), which purchased 60% of the government’s tea assets. CDC established the East Usambara Tea Co. to stabilize the industry, later selling it to Global Tea and Commodities, a U.K.-based tea packer operating three factories. By 1990, Brooke Bond Tanzania, located in Mufindi, the largest of four plantations in Tanzania, was making 6.6 million kg of tea a year, equal to the combined production of the other three plantations.
New millennium
By 2000, revenue from tea exports had increased to $33 million on a volume of 22.6 million kg. By comparison, coffee exports reached $84 million that year, rising to $100 million in 2008.
Tea export value peaked at $57 million in 2013. Whereas Tanzania’s coffee has built global recognition for its unique terroir, the nation’s tea is not seen as distinctive. This lack of national “branding” explains in part the steady decline to $30 million in export sales in 2022 on volume of 26 million kg. In contrast, coffee exports reached an all-time high of $161 million last year.
The decline of Tanzania’s tea earnings has been exacerbated by falling prices at tea auctions worldwide; low use of agricultural inputs, particularly fertilizers; drastic weather conditions (mainly prolonged dry spells); and incidence of frost burn.
In 2022, the average price of tea from all ten tea origins auctioned in Mombasa was $2.40 per kg, down from the 2018 average price of $2.49 per kg. For the past decade, Rwandan teas have consistently won the highest auction prices at Mombasa. Buyers paid an average of $2.83 per kg for Rwandan tea at a typical high-season sale in April 2022. Kenyan sellers received an average $2.43 per kg. Tanzanian tea, however, sold for an average of $1.51 per kg. Yet that was higher than the average of $1.43 per kg fetched by Ugandan tea.
“Global tea production is far higher than global tea consumption,” Ndunguru observed. “And because of that, tea prices globally have either remained constant or are declining over time.
“In the future, we expect there will be a crash because the cost of production is constantly increasing while the prices emanating from tea are declining. The only solution to this challenge is to increase the quality of tea to meet export market demands and increase local consumption,” he said.
Domestic consumers drink about 5 million kg of Tanzanian tea annually, about a fifth of the country’s output. Trade policy discourages imports of made tea. Efforts to expand the local market are underway.
Commodity-grade exports
The U.K. remains Tanzania’s top tea customer, importing $11.9 million worth in 2022. Pakistan purchased $9.1 million worth of Tanzanian tea in 2022, surging 30.6% in value year-over-year, according to data compiled by UN COMTRADE. South Africa ranked third, buying $4.7 million of Tanzanian tea. The UAE imported $3.2 million, and Poland imported $1.7 million worth of tea. Kenya imported less than $1 million in tea.
Previously, Kenya had been a large importer of Tanzanian tea. In the late 2010s, Kenya bought lots of this origin for re-export in its own “Kenyan” blends, which fetch higher prices. In 2019, for example, it imported 15 million kg of Tanzanian tea valued at $16.6 million.
Kenya was buying ever greater quantities not only of Tanzanian tea but also Malawian and Ugandan, at prices below Kenya’s own cost of production. Yet it sold them at Kenyan prices. Tanzanian producers earned little, if any, of the margin that Kenyan blenders obtained from this transaction. Keep in mind that Kenya’s tea business is huge — worth $1.2 billion in 2022.
Tanzania wised up in 2018. Concerned about low prices and lack of identity in the marketplace, Steven Mlote, then chairman of the Tanzania Tea Board, announced that the Board would construct dedicated warehouses to store bulk tea, then establish its own tea auction.
Mlote predicted annual sales of only between 5 million and 8 million kg of Tanzanian tea. This volume was insufficient to generate the revenue needed to operate profitably, so the tea board began conversations with landlocked Uganda, Malawi, Rwanda, Mozambique, the Democratic Republic of Congo, and Burundi. Burundi, and Uganda signaled interest.
Covid-19 added urgency to Tanzania’s negotiations because pandemic measures caused thousands of trucks of tea from various origins to be halted at the Kenyan border.
In 2020, Tanzania began selling directly to Pakistan, bypassing the auction. Its shipments of tea to Mombasa fell to just 116,224 kg, generating only $450,000.
Trade hub
On November 13, 2023, the Dar es Salaam auction commenced. During opening ceremonies, tea board director general Mary Kipeja said the auction will lower costs, increase transparency, and make Tanzania a regional hub providing services to tea-growing countries across East Africa.
The Tea Board’s Kafanabo said that the tea industry has suffered due to low investment in value addition. “The world has changed from traditional tea. Consumers are now more focused on using quality teas and herbal teas. So, we are strategizing on inviting more value addition, more investment in specialty teas rather than exporting teas in bulk,” she told STiR.
The government’s decision to prevent Tanzanian tea farmers from selling their tea in Mombasa ensures there will be teas on offer. In November, five sellers offered nine grades of tea.
Mombasa is the world’s largest tea auction, in bountiful years handling as much as 550 million kg from 10 countries. It is the second-largest black tea auction center after Colombo, Sri Lanka. Quantities auctioned have increased by over 300% in the past 20 years, according to the East African Tea Trade Association (EATTA), which manages the auction. But prices are volatile and declining. In 2021, the Kenya Tea Development Agency (KTDA) tried establishing a base price, but buyers ignored it.
Most of the tea auctioned in Mombasa is Kenyan grown (60%), with Uganda accounting for 8% by volume. Rwanda, Burundi, Malawi, the Democratic Republic of Congo, Madagascar, Mozambique, Ethiopia, and Tanzania make up the remaining 32% by volume, selling as much as 175 million kg at the auction in a bountiful year.
The Dar es Salaam auction will sell teas from Tanzania, Burundi, the Democratic Republic of Congo, Malawi, and Uganda. Tea will be warehoused, then shipped from the Dar es Salaam port and Port Tanga. Tanzania hopes to sell 65,000 packages a week, about one fourth of Mombasa’s average weekly volume of 247,000 packages, which range in weight from 50 to 60 kg.
Tanzania’s black tea output is less than 1% of the tea produced globally, but it is widely distributed around the world as a preferred base in tea bags and herbal infusions. The availability of other African origins at Dar es Salaam will increase the auction’s appeal.
“We are optimistically looking at offering 60% of the teas grown in Burundi and 30% of the tea from Malawi,” said veteran tea trader Stephen Anyango. “We can absolutely do 100% of the Congo’s export volume if price realization through the Dar auction is actualized.”
“Rwanda may be a tall order except for their second grades. It is worth noting that Tanzania’s government investment in a state-of-the-art common user blending facility will attract buyers,” said Anyango, managing director of Nemooneh Iranian Food and Beverage in Tehran.
Dar es Salaam may have a cost edge in logistics compared to Mombasa. The cost of transporting tea long distances in East Africa is high given the poor conditions of roads, Anyango said. It is cheaper to truck to Dar es Salaam than to Mombasa because many trucks from Burundi, Congo, Zambia, and Malawi travel there to pick up large quantities of goods for import. Many vehicles are empty on the trip to Tanzania, so they could offer cargo transport at lower rates. This could benefit Malawi’s tea exporters, for example.
Think big
The port at Dar es Salaam is expanding, and Tanzania has designated a nearby industrial area for processing tea. If all goes well, the project could follow in the footsteps of Dubai in developing a successful tea trading hub. In the years since Dubai Multi Commodities Centre opened in 2002, the United Arab Emirates has become the world’s highest-volume tea re-export hub and one of the top five tea processing centers. Location and logistics are the competitive edge that made DMCC a tea hub for seaborne shipments. Similarly, Dar es Salaam may emerge as a gateway to East Africa by road and sea.
Rail will play a role too. The East African Community (EAC) has obtained funding from the African Development Bank to create an efficient rail system. A new standard-gauge railway (SGR) will improve cross-border and intra-country connectivity, according to the International Railway Journal (IJR).
Tanzania’s tea ambitions appear to be on track.