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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.

“This causes the country huge problems when there is disruption in any of the major markets as is currently happening in Egypt, the biggest importer of Kenyan tea,” Mr Peter Kimanga, a tea manager with Global Tea Commodities said. With the country now producing more than 400 million kilogrammes a year, value addition is an imperative. Traders seeking value addition can only buy it from tea factories where they pay a 16 per cent Value Added Tax. They also import expensive packaging equipment and materials. Normally, the value added tea enters the market at 20 per cent extra cost; hence, the preference to sell it in bags through Mombasa weekly auctions, Mr Kimanga said. If Kenya can add value to its tea, it would open markets in more than 100 countries, he added. Due to lack of a vibrant tea processing industry in most countries, they prefer to buy ready to consume tea.
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.