Egypt crisis: Why Kenyan teas must add value to boost profit
By SENIOR WRITER
The over two week old crisis in Egypt has renewed debate on the need for value addition of Kenya’s tea.
Kenya exports tea in bulk and more than 60 per cent of it goes to a handful of countries that include Pakistan, Afghanistan, Sudan, United Kingdom and Egypt.
Value addition would earn countries huge returns according to East Africa Tea Trade Association. An analysis of the Sri Lanka tea export market, where there is significant value addition, shows that Kenya exported more tea in volume than Sri Lanka in 2009 by 15 per cent but the other country earned 76 per cent more from its exports than Kenya did, the tea trade association said in a position paper late last year.
“Sri Lanka also sells 61 per cent of her tea in bulk and 39 per cent in value added form,” the paper said.
Kenyan tea has never hit the market as the globally acclaimed pure and quality product. “Instead, it is mostly handled by UK-based agents who blend it with inferior teas from elsewhere, leading to massive loss of value and taste by the time it reaches consumers. When key markets collapse, as in Egypt, there is normally a huge ripple effect. Egypt has a market share of 21 per cent and in the two weeks of the crisis, tea prices have fallen.” “In the January 18 auction, buyers were offering US$ 3.28 a kilo of grade 1 tea, Pokoe Dust, compared to US $2.99 they offered last week. The amount of tea offered for sale and not disposed in the last 3 auctions is over 30 per cent. “This creates an impression of oversupply,” Mr Kimanga said.