TEA MARKET DEVELOPMENT IN KENYA

Agriculture, Fisheries and Food Authority(AFFA)

TEA DIRECTORATE

Samuel OgolaTechnical Services Manager-Tea Directorate

Contribution to Economy

Tea Contributes immensely to socio-economic development of the country:• It is the leading foreign exchange earner-23% of the total foreign

exchange earnings. • 4% of the GDP.• livelihood support to over 5 million Kenyans. • Contributes to Rural development.• In 2013, the tea industry earned the country Kshs. 114 Billion (Usd

1.33 Billion) in export earnings and Kshs. 22 Billion (Usd 0.26) in local sales.

Role In the Industry

Regulation and compliance Industry planning and development Industry advocacy Trade and promotion Organizational capacity and service

delivery enhancement

Key Industry Statistics

    2011 2012 2013

No.of Growers

Total 639,521 627,938 614,159Smallholder 606,744 595,152 575,103Plantation 32,777 32,786 39,056

Hectarage

Total 187,855 190,717 198,657Smallholder 123,385 124,985 127,352Plantation 64,470 65,732 71,305

No.of factories

Total 104 105 107Smallholder 64 64 64Plantation 40 41 43

Stabilized Production levels (Million Kgs)

2009 2010 2011 2012 20130

50

100

150

200

250

300

350

400

450

500

314

399377 369

432

f(x) = 20.6 x + 316.4

Year

Mad

e Te

a (M

illio

n Kg

s)

Export Trends (Million Kgs)

2009 2010 2011 2012 20130.00

100.00

200.00

300.00

400.00

500.00

600.00

342.48

441.02421.27 430.20

494.35

Year

Mill

ion

Kgs

Increasing Export Values (billion K.sh)

2009 2010 2011 2012 20130

20

40

60

80

100

120

69

97

109 112 114

Year

Billi

on K

.sh

Efforts to Grow Exports(2009-2013)

PAKISTAN EGYPT UK AFGHANISTAN SUDAN EMERGING TOTAL

-5%

0%

5%

10%

15%

20%

25%

10%

1%

-1%

22%

7%

8%

6%

Improving Local Consumption (Million Kgs)

2009 2010 2011 2012 20130

5

10

15

20

25

30

1819

20

22.7

26

MILL

ION

KGS

Global Supply/Demand Trend (Million Kgs)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -   

 250  500  750 

 1,000  1,250  1,500  1,750  2,000  2,250  2,500  2,750  3,000  3,250  3,500  3,750  4,000  4,250  4,500  4,750  5,000  5,250 

Supply Demand

Million Kgs

Declining Tea Auction Prices (2013-2014-To Date)

13-1

13-3

13-5

13-7

13-9

13-1

1

13-1

3

13-1

5

13-1

7

13-1

9

13-2

1

13-2

3

13-2

5

13-2

7

13-2

9

13-3

1

13-3

3

13-3

5

13-3

7

13-3

9

13-4

1

13-4

3

13-4

5

13-4

7

13-4

9

13-5

1

14-2

14-4

14-6

14-8

14-1

0

14-1

2

14-1

4

14-1

6

14-1

8

14-2

0

14-2

2

14-2

4

14-2

6

14-2

8

14-3

00.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Auction No.

Pric

e (U

SD/K

gof M

ade

Tea)

Our Challenges

Sustained increase in production (Black CTC tea) leading to global oversupply.

Global supply is growing at higher rate than demand by about 3% annually.

Slow adaptation to product and Market diversification e.g “Orthodox ,Specialty teas etc. .

Origin Branding Low consumption patterns in Africa.

Continued

Declining Tea prices leading to Reduced grower earnings (30%)

Rising Cost of Production (COP); Many private standards and diverse regulatory

requirements by respective importing countries. Low innovation along the value chain

Opportunities to Promote Tea

Promotion of value addition for Kenya teas, a target of 20% has been projected:

Increased populations in Africa and Asia Increased awareness of health benefits of tea in

Europe and America . Increased income levels and expanding middle

class globally . Low consumption in Africa ,currently Africa has a

population of 1.1 Billion with a low consumption of 0.30kg per capita

15. Continued …….

Promotion of tea based on Origin. Adopting product diversification and innovation

e.g Purple tea, Orthodox tea, White tea e.t.c. Adoption of cottage Industry models to promote

specialty and niche teas segments.

Conclusion ……….

Prepared a National Tea Policy towards improving competitiveness and sustainability of the Industry.

Developed Kenya Climate Change Strategy for the Tea Industry in collaboration with FAO .

Automation of the tea Auction with a view to improving transparency and enlarge competition;

Commissioned a study on Price Stabilization Fund (PSF)and Min. Greenleaf rate to the growers .

Thank You!Agriculture, Fisheries and Food Authority(AFFA)

TEA DIRECTORATE