Kenya moves to address unsold tea stock as industry faces market challenges

KENYA – The Kenyan government and the Kenya Tea Development Agency (KTDA) have introduced a series of measures aimed at stabilizing tea prices and tackling the issue of unsold stock. 

The initiative follows concerns over an estimated 100 million kilos of tea that remained unsold at KTDA warehouses in Mombasa as of July last year.

A consultative meeting held in Kisumu brought together factory directors from the West Rift, the Tea Board of Kenya, the East African Tea Trade Association (EATA), tea buyers, and KTDA management to deliberate on the crisis. 

Discussions focused on market stagnation, pricing strategies, and the need for regulatory adjustments to revitalize the sector.

Government suspends minimum reserve price

In August, the government suspended the minimum reserve price, which had been set at Kes 313.31 (US$2.45) per kilo in 2021 to protect farmers’ earnings. 

Authorities hope this move will unlock new purchases and ease the backlog of tea stock that has been shunned by buyers since last year.

During the meeting, Agriculture Principal Secretary Paul Ronoh directed all factories to submit an update on their unsold tea inventories within a week to the Tea Board of Kenya. 

“All tea factories are required to provide data on unsold teas so that the necessary steps can be taken to address the issue,” Ronoh stated.

Task force to investigate the tea stockpile crisis

In November last year, the  government formed a special task force to investigate the root causes of the unsold tea stockpile and its impact on the sector. 

The 15-member team, chaired by Nicholas Munyi, was mandated to propose short-, medium-, and long-term solutions to the crisis.

The task force is also expected to examine issues such as delayed payments to farmers, warehousing conditions, and disparities in pricing between the East and West Rift tea-producing regions. 

As part of its mandate, it will engage industry stakeholders through meetings and public forums across the country.

New measures to safeguard the tea industry

The government announced a ban on selling tea below the cost of production, shifting full responsibility for sales management to factory directors. 

Factories were also directed to prioritize quality enhancement and to collaborate closely with brokers to establish competitive tea prices.

Additionally, the government committed to reviewing levies and taxes on tea to promote value addition industries. 

Financial support has been pledged to assist older factories in modernizing their operations, ensuring their sustainability in an increasingly competitive market.

Exploring new markets and strengthening value addition

Efforts to identify new international markets for Kenyan tea were also discussed, with buyers expressing their willingness to support higher prices for farmers. 

Expanding trade partnerships is seen as a critical step in reducing reliance on traditional markets and mitigating price fluctuations.

Meanwhile, Kenya has become the first African country to establish a decaffeination facility. 

Global Tea & Commodities Limited has announced a Kes 3.2 billion (US$24.76 million) investment in a new tea processing plant in Kwale County. This initiative is expected to enhance value addition, improve export competitiveness, and boost earnings for local farmers.