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GACHOKI: Tea industry at a crossroads

Tea is an important commodity to Kenya as the leading foreign exchange earner and leading export commodity.

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by DAVID GACHOKI

Columnists01 March 2024 - 14:49
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In Summary


  • Statistics reveal that productivity is either declining and/or stagnating
  • It is therefore imperative to revisit the leadership of the institutions and companies involved in navigating through these mazes
Tea pickers in Kangaita village.

Like any other industry, the tea industry has its fair share of concerns and opportunities. More often than not the supply side of the tea value chain affecting smallholder farmers and their affiliated factories comes to mind. Their challenges are quite distinct from what traders and service providers have to contend with.

One would want to ask what are these specific challenges and concerns at the farm level, processing level and trading level? What actually puts the tea industry at a crossroads? Why is this important?

Tea is an important commodity to Kenya as the leading foreign exchange earner and leading export commodity. The tea industry is a source of livelihood for more than 5 million people (one-tenth of the population) directly and indirectly. With tea growing and manufacturing being rural-based activities, the tea industry is the leading contributor to rural infrastructural development and well-being for rural communities.

In an earlier article, I argued that my growing up in rural Kirinyaga gave me the opportunity, very early, to understand the benefits of a robust cash crop economy. Ending up making a career in the tea industry gave me the depth to understand how much things have changed. Tea farmers' fortunes have been dwindling and one needs to delve deeper to smell what’s been cooking.

Statistics reveal that productivity is either declining and/or stagnating; cost of production attributed largely to labour costs of tea plucking and fertiliser has been skyrocketing; there has also been rapid increase in tea supply that has impacted prices.

The market has variously complained of declining quality of tea offered for sale; farmers suffer technical and economic limitations to engage in meaningful value addition at the farm level; and finally, the payment methods are so unfavourable that they often put farmers in cash flow constraints. This is just at farm level.

At the processing stage, farmers are faced with unsustainable production costs attributed mainly to rising labour wages and high cost of machinery, transport and energy as well as a multiplicity of taxes and levies; limited value addition arising mainly from the high cost of machinery and imported packing materials, taxes and high market entry barriers; inefficient marketing arrangements and inability to capitalise on opportunities offered by alternative marketing channels; poor harmonisation and optimisation of other auxiliary services; and a marked decline in quality.

The concerns at the trading level are in different forms and would require careful diagnostics given the influence of buyer preferences and changes in consumer tastes, as well as the need for technological innovations in customer-centric product development, distribution networks, transportation/warehousing, merchandising and risk-taking.

It therefore ends up being a verdict on the institutions and leadership of those involved at this stage. It immediately follows that we must examine the institutional governance and coordination of policy formulation and implementation, especially in price discovery mechanism and the role played by each participant, whether commercial or the regulator.

Next one would question the predictability and stability of the destination markets given that we are a net exporter. Then, look at the domestic market, which is influenced inter alia by taxes on value addition and domestic trading.

It is therefore imperative to revisit the leadership of the institutions and companies involved in navigating through these mazes, while subjugating any potential and avoidable conflicts of interest.

When I professionally joined the tea industry to start an enduring career some 25 years ago, I was inducted by Michael Gakungu in tea growing at Karirana.

I then fell into the hands of Tom Muchura, Peter Kimanga and Nick Munyi, the gurus who taught me tea trade, and finally, BM Kimani, who taught me a great deal of smallholder production logistics at KTDA. I will forever remain indebted to these gentlemen.

But one thing was common among these gentlemen, and which I learnt was common of all luminaries in the past—the passion for tea and its uniqueness. It takes many years to understand the depth of that passion.

With our laptop keyboard warriors beginning to take charge of key institutions and companies and a new generation that cares only about living large at whatever cost, clearly we are at a crossroads. I dare say, only technological advancements shall save us.  

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