The Kenya Tea Development Agency (KTDA) will expand orthodox production at 10 of its 12 factories, supported by $6 million in new government financing.
The administration of recently elected president William Ruto announced it would invest millions in the tea sector to boost foreign exchange earnings and reverse high unemployment in tea-growing regions. Expanding production would employ as many as 80,000 more workers, according to the Tea Board of Kenya.
The investment comes at an opportune time because production has sharply declined in Sri Lanka, the world’s largest producer of orthodox tea (ODX).
Tea prices stabilized at the Mombasa Auction following the exit of Russian and Ukrainian buyers last spring and of Pakistani buyers during the summer. In November, auction prices traded above the government-set minimum price of $2.46 per kilogram for the first time in nine months. Bidders largely ignored the threshold until the first sale in November, when the East African Tea Trade Association (Eatta) recorded an average price of $2.46 per kilogram.
Export earnings through July were 80 billion Kenyan shillings ($657 million), up from 71 billion shillings for the same period in 2021. KTDA represents 650,000 growers and accounts for 85% of the tea sold at the Mombasa Auction, according to the Kenya Tea Directorate.
Last year KTDA produced five million kilograms of specialty tea, which commands high prices. White ODX teas, for example, brought as much as 7,000 shillings ($57.50) per kilogram. Purple ODX teas are auctioned for 2,400 shillings ($20) per kilogram. CTC (crush, tear, curl) teas, on the other hand, sell for just 270 shillings ($2.25) shillings per kilogram.
Tea currently accounts for 22% of Kenya’s foreign exchange earnings. In 2021 tea exports topped $1.36 billion (135 billion shillings). Shortly after taking office, President Ruto announced that the government would construct a modern common-use facility in Mombasa to process and package tea. The public-private venture will add value to commodity offerings and expand the availability of orthodox black tea.
“Tea plays a key role in the socioeconomic development of our country. However, the tea industry’s full potential in Kenya has not been fully optimized due to low levels of value addition and product diversification,” Peris Mudida, CEO of Kenya Tea Board, told STiR.
Kenya, the world’s largest exporter of black tea, is not abandoning bulk production, said Mudida. “It is government policy to upscale tea value addition progressively to enhance tea growers’ earnings. The government has not banned the sale of tea in bulk,” she said.
KTDA (Kenya Tea Development Agency) was founded in 2000 through the privatization of the Kenya Tea Development Authority, which was established in the 1960s to process tea for Kenya's half million smallholders. Over time the authority built tea processing factories and warehouses, centralized transport, and provided financing to more than 65,000 farmers.
Today KTDA exports 60% of Kenya's tea on behalf of 650,000 growers/shareholders in 16 tea-growing counties. The Agency operates a network of Farmer Field Schools for growers cultivating 126,000 hectares of tea lands. KTDA is owned by 54 regional tea companies and operates 66 factories, of which 12 specialize in orthodox and specialty tea.