Kenya is enlisting Mombasa tea brokers in a national rescue plan to stabilize prices. President Uhuru Kenyatta, acknowledging the worst financial return for tea growers in a decade, has called for significant reform of the Kenya Tea Development Agency (KTDA).
These actions will curb the amount of tea available for direct purchase from gardens and encourage greater value addition at origin. Only 11 of Kenya’s 69 tea factories currently produce loose leaf tea.
Noting that middlemen took more than half of last year’s earnings, Kenyatta ordered the ministry of agriculture and the attorney general to work with the national competition authority to streamline operations. In a carrot-and-stick declaration, he demanded changes in practices that encourage corruption and led to a proliferation of brokers “who make a killing at the expense of farmers,” according to reports in the Digital Standard.
Brokers received an average Sh50 ($0.50) per kilo last year compared to growers who received an average Sh41 ($0.41) of the Sh91 ($0.91) per kilo price of cut, tea, curl CTC-grade tea. A new Kenya Tea Council will set limits on how much tea can be marketed direct (the recommendation is 20%) with the rest sold at auction.
President Kenyatta was quoted as saying his intentions in tea and other agricultural sectors is to “increase the money in the pocket of the farmer.” Kenyatta said it was “clear the governance of KTDA and entire marketing of tea will require to be restructured if we are to assure our tea farmers get more revenue from their tea sales.” KTDA processes and markets 60% of Kenya’s tea.
Kenya is the world’s largest exporter of black tea, a top foreign exchange earner that employs 50 million on hundreds of thousands of small farms. A 25% dip in earnings brought only Sh46.5 billion to farmers during the 2018-19 harvest compared to Sh62 billion in 2017-18. The annual tea bonus declined 36%.
Kenya exports about 95% of the tea grown. Its primary trading partners include Pakistan, Egypt, the UK, and Iran. Together these countries import 70% of the annual harvest. All but UK are growing markets but Iran has failed to make timely payments and conflicts in nearby Yemen and Sudan have limited sales. Production soared in 2018 to a record 493 million kilos which convinced large numbers of growers to expand their gardens. In response 2019 prices at auction fell by 21%.
―By Dan Bolton