Kenyan government unveils strategies to boost processed tea sales, reduce unsold inventory

KENYA – Kenya Tea Development Agency (KTDA), has clarified that the actual figure of tea it still holds is significantly lower at 100m Kgs contrary to the figure that was in circulation.

“KTDA is only holding 100 million kgs of unsold teas from smallholder tea factories,” read part of a statement by PS Ronoh who attended a meeting that also involved KTDA officials, the East African Tea Trade Association (EATTA), tea buyers and brokers.

The meeting was structured to address the increasing stocks of unsold tea held by smallholder tea factories managed by KTDA.

The PS said the country was witnessing overproduction of tea due to increased acreage and favourable weather conditions. However, traders at the Mombasa auction blamed the glut on the reserve prices directive.

Mombasa Tea Auction also indicated that the halting of direct exports by the Kenya Tea Development Agency (KTDA) contributed to the increase in unsold tea.

Responding to the claims, the PS said the government will amend the Tea Act 2020 to allow for Direct Sales Overseas (DSOs) by all tea producers, including those managed by KTDA.

 In the meeting, the government explained that the new consideration aims to open new markets and streamline the sales process.

 In 2021, the reserve price for a kilo of processed tea was set at US$2.43 in a bid to cushion farmers from falling prices.

 However, the government explained that the reserve price mechanism, which has been a point of contention, will undergo a review to align with current market dynamics.

Producers are encouraged to diversify their tea production, moving beyond traditional black CTC tea to include orthodox and speciality teas.

Additionally, KTDA will introduce a dedicated trading platform within the tea auction for orthodox and speciality teas, enhancing their visibility and marketability.

The government also said all tea producers must adhere to a minimum tea quality standard of 65 per cent to tackle the declining quality of Kenyan tea.

PS Henry assured the tea industry stakeholders that the government will collaborate with them to boost tea value addition from the current 5 per cent to over 22 per cent.

To support this, the government will establish a Common User Facility (CUF) for value addition and implement fiscal incentives such as tax exemptions as it also intensifies marketing efforts.

 The government seeks to sign MOUs and bilateral agreements with key international markets to improve access to Kenyan tea.

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