Agency eyes higher prices with specialty tea production

Tuesday April 29 2014

Workers load tea bags on factory coveyor belts as processing start at Chinga tea factory in Othaya on March 29, 2014. The drop in the prices of tea is not a creation of KTDA. Tea prices are controlled by market forces of demand and supply. Photo/ JOSEPH KANYI

Workers load tea bags on factory conveyor belts as processing start at Chinga tea factory in Othaya on March 29, 2014. Photo/ JOSEPH KANYI 

James Ngunjiri
By James Ngunjiri
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Kenya Tea Development Agency (KTDA) says two factories are putting up processing machinery in plans to diversify the market and boost prices with specialty beverage.

Chairman Peter Kanyago said at the weekend that the agency would introduce orthodox tea production in its factories to mitigate against low prices and widen its share in the global market.

The agency has commissioned two factories — Michimikuru in Meru and Itumbe, Kisii — that are putting in place equipment to start producing orthodox tea, but this will be expanded to all tea growing zones.

Speaking at Iria-ini tea factory in Othaya, Nyeri County, Mr Kanyago said that the agency was targeting ready markets in Russia, Iran and European countries like Germany and France that prefer orthodox tea.

Key importers of Kenyan tea such as Egypt, Sudan and Afghanistan face political and economic instability, affecting the demand for the cash crop.

Kenya processes tea by cut-tear-curl (CTC) technique in which withered tea leaves are cut into small, grainy pieces.

Orthodox leaf manufacture involves use of top quality tea leaves that are withered then rolled, oxidised (fermented) and fired to produce robust flavour. Most speciality tea are produced by orthodox method and are of higher quality and market value than CTC manufactured.

A quarter of the tea produced will be by orthodox method once the new system is implemented. Currently, production of tea is at 250 million kilogrammes.

The agency said that it would initially select factories with adequate capacity to avoid financial constraints as well as build plants to accommodate the new production line.

“We are starting with one (orthodox production) per zone, but as demand grows we shall increase,” said KTDA regional operations manager Margaret Gachinga.

However, the agency said a lack of necessary export legislation and duty exemption on farm machinery and other equipment was a hurdle to value addition plans in tea production.

Stakeholders say high cost of machinery required for value addition and levies on tea packaging materials for local consumption are also a challenge in the sector. “We are looking to value addition that would fetch better prices, but there are many challenges,” said Mr Kanyago.

“It is not as easy as people think. In countries like India and Sri Lanka companies are given export compensation for value added tea, tax holidays and exemptions on machinery for value addition.”

According to the 2007 Tea Industry Task Force Report, there are more than 15 forms of taxes and levies on tea, which impact negatively on the returns to the cash crop grower.

“There is a need to rationalise and minimise these taxes and levies in order to make tea growing profitable to the farmer. This also affects the tea value added products,” said the task force report.