Kenya’s tea industry is on the verge of a significant transformation as the government prepares to implement reforms that will allow all 142 tea factories across the country to sell their produce directly to international markets. These changes aim to eliminate intermediaries and enable factories to secure better earnings for farmers, enhance transparency, and boost the global competitiveness of Kenyan tea.
The new policy direction supports broader efforts to revamp the agricultural sector. By allowing direct sales, the government hopes to empower tea producers, increase profit margins for farmers, and reduce reliance on brokers who have long dominated the export market. The strategy will work hand in hand with national marketing campaigns designed to strengthen Kenya’s position in global tea markets.
To bolster these efforts, a delegation consisting of key industry stakeholders including representatives from the Tea Board of Kenya (TBK), the Kenya Tea Development Agency (KTDA), and the East African Tea Trade Association (EATTA) will soon embark on trade missions targeting major emerging markets. These destinations include the Far East, the Middle East, China, Russia, and India, where demand for premium teas is rapidly rising.
In addition to allowing direct sales, a new orthodox tea auction window will be introduced under the Integrated Tea Trading System. Managed jointly by EATTA and the TBK, the auction is scheduled to begin in June. It is expected to reduce the growing surplus of unsold tea, which stood at over 100 million kilograms in Mombasa warehouses as of July 2024. The auction will create a structured marketplace specifically for orthodox teas, encouraging product diversification beyond the traditional Cut, Tear, and Curl (CTC) types that dominate Kenya’s tea production.
This initiative is projected to influence global pricing positively, giving Kenyan tea a stronger foothold in premium market segments. The reform aligns with the broader theme of this year’s International Tea Day: “Tea Industry Sustainability Looking into the Future,” which focuses on securing long-term profitability and environmental responsibility in the sector.
The government has also committed to supporting the industry through technological advancements and improved farm-level practices. Investments in ICT, soil testing, and other technical services will be expanded to ensure that farmers can maintain high-quality output. Emphasis has been placed on preserving Kenya’s reputation for producing the world’s finest tea, as quality remains a key driver of price and market access.
The TBK has reported an increase in tea production from 570 million kilograms in 2023 to 598 million kilograms in 2024. With international sales generating KSh 215 billion in revenue last year, stakeholders are optimistic that the introduction of the auction and direct sales will significantly raise earnings. Orthodox teas, currently fetching between USD 3.4 to USD 4 per kilogram, could potentially reach prices of up to USD 10 in markets such as China.
Proposals in the upcoming Finance Bill to exempt packaging materials from taxation are expected to cut costs and create more local jobs, reversing the trend of outsourcing packaging to foreign countries like the Philippines and the UAE. Stakeholders have also recommended scrapping the 16 per cent VAT on local tea sales to boost domestic consumption, which currently contributes only 5 per cent of total tea revenue.
Other structural issues, such as poor road infrastructure and inter-county trade restrictions, have been identified as key contributors to high production costs. Addressing these barriers is critical to ensuring that the benefits of the reforms reach the farmers, who form the backbone of Kenya’s tea industry.
These reforms mark a pivotal step toward transforming Kenya’s tea sector into a more efficient, farmer-focused, and globally competitive industry.
