Uganda tea industry calls for reforms, funding support as sector recovers from price slump 

UGANDA – The Uganda Tea Association (UTA) has renewed its call for urgent reforms and sustainability measures to revive the country’s tea industry, following years of market volatility, declining production, and financial strain across the value chain. 

Speaking in an interview, UTA chairperson Victoria Ashabaahebwa said the sector is gradually recovering from disruptions caused by global conflicts, including the Russia-Ukraine war and instability in the Middle East.  

“These disruptions caused a sharp decline in tea prices, affecting cash flow across the entire value chain. We saw factories close and reopen, downsizing operations, and production dropping from over 60 million kilogrammes to about 40 million kilogrammes annually,” she said. 

At the peak of the crisis, Uganda’s tea prices fell to as low as US$0.50 per kilogramme, placing significant pressure on producers and smallholder farmers. In response, the association engaged the government in 2023 with proposals aimed at stabilising the sector across short-, medium-, and long-term horizons.  

One key recommendation was the provision of working capital equivalent to 30 percent of industry needs to enable factories to purchase green leaf from farmers. 

“The entire system is interconnected. When factories cannot pay farmers, farmers cannot invest in fertilisers or quality inputs, and the entire value chain suffers,” Ashabaahebwa explained. 

Following consultations with stakeholders, including the East African Tea Trade Association, President Yoweri Museveni pledged UGX152 billion (US$40.71M) in working capital support, alongside fertiliser subsidies for farmers.  

However, the association is urging the government to expedite the release of funds, warning that delays could hinder recovery. 

“Uganda largely relies on bulk exports through the auction system, but we are now shifting strategy to establish direct connections with buyers in key international markets,” Ashabaahebwa said. 

To support this transition, UTA has partnered with financial institutions such as Diamond Trust Bank to develop tailored financial solutions for the sector.  

Kaziro Kyambadde, head of corporate and institutional banking at the bank, said: “We have experience financing tea in Kenya, where farmers and producers have benefited through asset financing. We believe Ugandan producers can equally benefit.” 

The association is also drafting a five-year strategic plan focusing on financing, logistics, market access, and value addition, aimed at reducing reliance on auction-based exports. 

Despite challenges, tea prices improved by more than 20 percent in 2025, with strong demand at the Mombasa auction absorbing about 90 percent of Uganda’s tea. However, the industry continues to face high production costs, labour shortages, poor infrastructure, and limited access to affordable credit. 

Grace Kyomugisha, chairperson of Kayonza Growers Tea Factory, said: “Both the fertiliser support and the Ugx152 billion bailout must be provided simultaneously.” 

State Minister for Agriculture Bwino Fred Kyakulaga said the government has developed a Ugx 310 billion (US$83.04M) intervention plan. “As government, we have taken a decision to treat tea as a strategic crop, and this is reflected in our engagements with industry players,” he said. 

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