A tea picker in a plantation in Kericho County. PHOTO/ALAMY
By ABDULHAKIM SHERMAN
The tea sector value chain requires restructuring to make it more efficient and transparent undertaken by the secretariat of Food and Agriculture Organisation of the United Nations (FAO) says.
The FAO report of the Kenya Tea Value Chain Technical Assistance Mission calls for the restructuring of the value chain, including the tea auction to make it more efficient, transparent and fair.
It calls for the formation of an independent marketing agency of KTDA to more effectively market Kenyan tea and the process shorten the value chain ensure competitive and rapid positioning of Kenyan tea worldwide.
The FAO report adds that the price gap between the auction and retail is so large it strongly supports the establishment of a marketing agency for KTDA teas to fully realise the potential and the bargaining position of a company that controls more than 60 percent of total tea produced in Kenya.
It adds that improving market transparency would go along way to removing suggestions of collusion, particularly among brokers and buyers and it suggests that this function be taken up by the Tea Research Institute by expanding its mandate to include economic and market research.
The report says overall, the KTDA estimates that at least 100 million kilogrammes of green leaf are lost to hawking each year. This is equivalent to 23.5 million kilogrammes, or 10 percent, of made tea produced by KTDA in 2014/2015.
Gem MP Elisha Odhiambo who has taken a Bill in Parliament aimed at reforming the tea sector. PHOTO/FILE
The report says tea growers received US$0.47 per kilogramme of green leaf, while retailers received US$ 5.56 per kilogramme of loose tea and US$ 11.22 per kg for tea bags.
The FAO report says a major problem in the KTDA supply chain in leaf hawking, which is undermining targeted throughputs at various tea factories.
The report adds automated records of KTDA members indicate a drop in green leaf deliveries for some growers.
“For instance, six million kilogrammes or 30 percent of expected green leaf throughput at the Kiambaa tea factory is lost to hawkers every year,” the report says.
The Mombasa tea auction has also been infiltrated by “briefcase buyers.” These are buyers who approach producers directly to buy their tea, bypassing the auction system.
“Similar to green leaf hawkers, these buyers offer immediate cash for lots, but at lower prices. An estimated 40 percent of tea production, 25 percent of which are KTDA teas, are sold in this manner and does not reach the auction,” it adds.
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