What should be done to make our green gold to shine again
By Benjamin Bett
| August 3rd 2021
The government has in the recent past been trying to rescue the tea sector from imminent implosion. Agriculture CS Peter Munya has been at the forefront advocating for reforms to ensure the entire value chain is sustainable.
Whereas this is a well-meaning objective, the focus of the government and all stakeholders should now move to ensuring that the entire value chain is sustainable and special focus should now be paid to the viability of the many independent tea processors.
Tea processors fall primarily in three distinct categories defined by their source of raw material: The smallholder KTDA factories, independent private tea factories and multinationals owning nuclear tea farms. The independent tea producers tap green leaf from smallholder farmers and are owned 100 per cent by Kenyan investors who have come forward to support both the industrialisation pillar of the government’s Big Four agenda and the current tea reform agenda.
Most of these investors grew up in the golden years of the green gold. Independent producers now number over 30 tea factories and process approximately 35 per cent of tea from smallholder farmers. Last year, the independent producers earned the country Sh45 billion in forex revenue.
Sadly, over the last three years, revenue from tea has been on the declining in the international markets at a faster pace than that of direct payments to farmers for produce delivered. This imbalance has caused a strain on tea processors, which is endangering the existence of tea factories. Market prices are now at their lowest ebb and require deliberate external intervention to return to the glitter of the green gold-when the farmers and processors made a decent Sh50 per kilogramme.
There have been multiple proposals from the independent tea processors on how the government can intervene to save tea by reducing the cost of production. Tea takes time to nurture before its benefits can be reaped. Farm inputs such as fertiliser and seedlings should be subsidised for tea farmers as it happens in the maize growing areas. Various annual licences and permits from both national and county governments should be consolidated and subsidised or exempted from the current over 25 licences to a manageable number. The administration of these licences alone in a typical tea factory is a huge cost that is eventually passed onto the farmers.
Wood fuel from eucalyptus trees is a ballooning cost in the tea production matrix and is further complicated by its unavailability within the tea growing areas. A typical tea factory requires at least 1,000 acres of land to sustainably farm the fast-growing eucalyptus. With pressures on land, such vast open lands are no longer available. However, the government has vast areas of deforested gazetted lands where independent tea processors can partner to increase the country’s forest cover sustainably through private-public partnerships.
Not all is lost, the tea industry has made certain positive strides to reclaim the glory of the green gold. The tea auction, for instance fully turned electronic last year.
As the government moves to restructure and realign the sector to a more farmer-centered policy, its efforts on the market front of setting minimum reserve prices for teas in the auction should be lauded and supported by all players in the value chain, particularly the tea producers, tea brokers and local and international tea buyers and traders.
The inevitable pains on business cash flows along the chain can be managed with gap financing. Let the dialogue now focus on setting the most reasonable and acceptable reserve price. All Kenyans of goodwill should support this new roadmap to reclaim the green gold of Kenya and CS should not dare blink.
Mr Bett owns two tea processing factories in Nandi and Bomet counties and is a member of Independent Tea Producers Association of Kenya
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