Bloomberg News

Kenya to Increase Value-Added Tea Exports, Regulator Says

March 29, 2012

Kenya, the world’s biggest exporter of black tea, plans to increase shipments of processed and packaged tea to boost foreign-exchange earnings, said Sicily Kariuki, managing director of the Tea Board of Kenya.

A feasibility study on value-addition was started in December and is expected to be completed by June, Kariuki said in a phone interview yesterday from Nairobi, the capital. A “special zone” offering investor incentives may be established to handle processing and packaging, she said.

“We shall know what shape the designated facility will take once a feasibility study is carried out,” Kariuki said.

Kenya produced 377.9 million kilograms (833 million pounds) of the tea last year, earning the country 109 billion shillings ($1.31 billion). All but 12 percent of the crop is sold in bulk, according to the Tea Board.

Processing and packaging facilities are needed in Kenya to prevent tea producers from seeking support services outside the country, said Peter Kimanga, chairman of the East Africa Tea Trade Association. Some growers in the region have joined the Dubai Tea Trading Centre, or DTTC, which offers a tax-free environment as well as processing and blending facilities, he said.

Members of the DTCC in East Africa include the Chai Trading Co., a unit of the Kenya Tea Development Agency, Finlays’ Kenyan subsidiary and McLeod Russel India Ltd. (MCLR)’s Ugandan and Rwandan units, the center said in an e-mailed response to questions today. Total tea traded through the center was 8.5 million kilograms of tea in 2011, while “value addition to tea” more than doubled to 4.3 million kiograms last year, it said.

“The center offers warehousing, blending and packing facilities under one roof,” DTTC said. “Increasingly, merchants are using this to develop blend recipes specific to countries’ and market requirements.”

To contact the reporter on this story: Githua Kihara in Mombasa via Nairobi at pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net.


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