Kenyan President William Ruto recently urged key policymakers and Kenya Tea Development Agency (KTDA) factory chairpersons and directors to step up efforts to establish a national brand, which would boost farmer income and increase the country’s visibility in the global market.
The following week, he demonstrated how to increase his nation’s stature by dining at the US White House with political leaders during the first state visit of an African leader since 2008.
Former presidents Barack Obama and Bill Clinton joined President Biden in welcoming Ruto, who was elected in 2022. Biden announced he would designate Kenya as a “major non-NATO ally,” enabling close cooperation in military pursuits and deepening cooperation on health, security, technology, and debt relief matters.
Ruto is considered a reform-minded friend of the tea industry. His administration is committed to boosting global value-added tea exports, aiming to achieve 60% value addition within the next five years. Only 10% of Kenya’s tea is blended and packed before export.
To encourage branding, Ruto’s administration waived taxes on packing locally produced teas and lowered the fee farmers pay to manage Kenya Tea Development Authority (KTDA) factories.
Ruto said he is dissatisfied with the progress made since challenging KTDA factory operators to boost export value. “Last year, we did away with taxes on packaging materials for tea. We, therefore, must expand common user facilities and add value to our tea,” Ruto said, adding, “We are the largest tea producer in the world, yet we don’t have a Kenyan tea brand, and therefore, our product gets lower prices than those of countries that produce less than we do.”
“KTDA and the Tea Board of Kenya must work together to brand our tea. We cannot continue exporting our tea in sacks,” he said.
At the meeting, he announced that administrators at KTDA’s 69 factories would no longer charge farmers a 2.5% management fee, reducing the fee to 1.5% of annual earnings.
Tea export earnings surged by almost a third in 2023, rising to $1.24 billion, an increase of 31%. Ten countries purchase 83% of the total volume, with Pakistan, Egypt, and the UK as the top destinations. Pakistan purchased 40% of Kenya’s output in 2023, an increase of 15% to $210 million.
According to USDA FAS data, exports to the US totaled 1.2 million kilos in 2023, down from 1.9 million kilos in 2022 and less than half the 2.8 million kilos the US imported in 2021.
Kenya mainly exports bulk black tea to the US. Imports of other packaged tea and tea in teabags are minimal, totaling 26,000 kilos, compared to more than 570,000 kilos of bulk tea sent to the US.
The value of Kenyan tea shipped to the US is up by 48% year-to-date (through March) compared to the same period in 2023, and the quantity of imports has increased by 72% to 596,833 kilos compared to 346,706 kilos imported during the period January through March 2023. The five-year trend indicates overall declines in the volume and value of Kenyan tea.
Ruto says that Kenya, the world’s largest black tea exporter by volume, misses out on financial gain due to a failure to establish a premium brand. He endorsed a partnership with Lipton Teas & Infusions to supply higher-quality tea leaves. Lipton buys half of its tea from Kenya and recently committed $3.43 million to help finance a tea innovation and technology academy serving tea-growing counties.
Auction prices remain low, averaging $2.24 per kilo in 2023 as output expanded.