Tea sector is a neglected cash cow in need of urgent attention

Globally, tea prices have continued to suffer with supply growing more rapidly than consumption.

Kenya is probably the only tea growing country where exports of bulk teas are far much easier than those that are value added. FILE PHOTO | NMG 

BY PETER KIMANGA

IN SUMMARY

  • Globally, tea prices have continued to suffer with supply growing more rapidly than consumption.
  • This should be the key concern by the farmers and government, not who owns this or that tea broking or producing company or how the tea auction works. Simply put, we have more tea than the world can consume, period!

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Hardly a day passes without reading a negative article on tea. And it is seasonal because it happens every time when tea prices decline. Politicians have also joined in condemning those in the supply chain, except of course the farmers.

Globally, tea prices have continued to suffer with supply growing more rapidly than consumption. Fashionable drinks like herbal and fruit infusions have also taken a large share of the throat, giving tea further competition. Together with this is the ever rising cost of production and lately, the declining quality of tea.

This should be the key concern by the farmers and government, not who owns this or that tea broking or producing company or how the tea auction works. Simply put, we have more tea than the world can consume, period!

But in as much as the world is saturated with tea, Kenya produces amongst the best teas in the world which can easily get a home. What does this mean? If we could package our teas at source, or get into partnerships/mergers with packers in the tea drinking countries, then our farmers will get that premium price and from a wider market portfolio away from the five bulk markets that we have.

Tea’s importance to the population and government should not be taken lightly. It remains the largest foreign exchange earner and the largest agricultural employer creating both white and blue collar jobs in the rural areas. Over 10 per cent of the population directly and indirectly depend on it.

Several task force reports have identified the challenges the industry faces and ways to mitigate them. The Tea task force report of 2007 was so comprehensive, identifying short and long term interventions that would return the industry back to profitability.

Rather than spend time and energy tabling tea Bills in Parliament or summoning stakeholders, all that is required is to interrogate these reports and act on the points raised therein, A recent report was done in 2017.

One of Jubilee’s Pillars is expansion of manufacturing sector with emphasis on agro processing. If there is a low lying fruit in creating millions of jobs and bringing in billions in foreign exchange, it is agriculture. I can sell all those organic fruits being sold along Mombasa-Nairobi highway or the mangoes, yams and papayas along the Thika-Nyeri highway in Europe at five times their price.

But from where I sit, the government doesn’t take agriculture seriously. To start with, all officers, and I mean all, in the Agriculture and Food Authority (AFA) have been in office on interim basis for the last six years. In my kingdom, interim officers are for ad-hoc committees, those that have a short life. How can such an important docket by run by interim heads?

Kenya tea is amongst the best in the world but reaches consumers out there after being blended with other teas outside Kenya. It is also used by tea packers to ‘blend-up’ lower quality teas. For Kenya teas to get the premium price they deserve, packers should be facilitated to do so.

But what facilitation do they get? Pay 16 per cent VAT on raw tea (same zero rated for bulk exports), 25 per cent import duty on packaging paper (including filter paper for teabags which is not available locally).

Kenya is probably the only tea growing country where exports of bulk teas are far much easier than those that are value added. The current tax regime favours bulk exports.

On the face value, tea appears to be doing exceptionally well because it’s clubbed together with loss making agriculture like sugar and maize. Naturally, the government will listen to farmers of the latter as they shout the loudest while holding begging bowls outside the governments’ doorstep.

For its full potential to be realised, tea must be separated from these non-performing sectors. If tourism, at Sh120 billion in 2017 has a standalone ministry, then tea at Sh129 billion in the same year should get one as well. Horticulture at Sh 305 billion (exports Sh115bn) should be put in the same ministry together with coffee and spices, a Ministry of Exportable Crops.

The Tea Board of Kenya, the apex body that linked the government to the industry was abolished in 2013. Who then does the government seek information from in the absence of a functional Board? It was this Board that was drawing promotional strategies and regulating the trade.

It is an established fact that tea is a healthy drink, with ability to inhibit some form of cancers especially for the skin. Kenyans should be encouraged to take tea for health (Health is one Jubilee’s four Pillars). If a strong economy like the United Kingdom has zero rated VAT on tea, why is Wanjiku, who grows and processes her tea at her coop factory, charged VAT?

The benefits of a robust and vibrant value added sector far outweighs the peanuts collected from the 30 million kilogrammes of tea consumed in Kenya whose bureaucratic protection has cost Kenyans the badly needed jobs.

PETER KIMANGA, Tea packer.

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