In a landmark move aimed at revitalizing one of the continent’s most vital agricultural exports, the Government of Kenya has announced a strategic Sh3.5 billion capital injection into the tea sector.
This significant funding is earmarked for the comprehensive refurbishment of tea processing factories; a step designed to elevate local production to international standards and empower farmers through aggressive value addition.
By modernizing these facilities, the government intends to shift the industry’s focus toward higher-quality outputs that can command premium prices at the Mombasa tea auction center.
During a high-level ceremony at the Olenguruone Tea Factory, where a corporation certificate was issued to grant the facility operational autonomy, the Principal Secretary for Agriculture, Dr. Kiprono Rono, emphasized that the welfare of the farmer remains the administration’s top priority.
As part of this commitment, PS Rono announced an immediate increase in the price payable to farmers, raising it to Sh26 per kilogram from the previous Sh16.
This price hike serves as the first milestone in a broader roadmap aiming to boost farmer earnings to Sh100 per kilogram by 2027.
“The government of Kenya is implementing sweeping reforms to revamp its tea sector, aiming to boost farmer earnings to Sh100/kg by 2027 by tackling low auction prices, high production costs, and increasing value addition.
Key strategies include Sh3.5 billion in factory modernization, promoting Orthodox tea production, digitizing payments, and removing VAT on tea exports,” stated PS Rono. He further issued a stern warning to the Kenya Tea Development Agency (KTDA) board regarding financial discipline, noting that corruption and the misappropriation of funds intended for factory development would not be tolerated under the new regime.
The modernization program will specifically target 19 tea processing factories to enhance operational efficiency and lower production costs. PS Rono challenged factory directors to look beyond raw exports and embrace diversification to meet the sophisticated demands of the global market.
“We must do value addition of our tea before we export. This strategy shifts from purely raw exports to increasing orthodox tea production, which fetches higher prices and promoting local value addition to meet global demand,” he added.
He also noted that under these reforms, factories will gain the autonomy to conduct direct sales, a move expected to bypass traditional intermediaries and increase transparency.
“By cutting out the middlemen, we ensure that farmers earn what they deserve. Price transparency is no longer optional; it is a necessity,” he said.
Supporting these sentiments, Willy Mutai from the Tea Board of Kenya highlighted the importance of scientific research and enhanced processing standards in strengthening Kenya’s negotiating power at the auction. Mutai explained that the new regulations would strictly govern payment timelines to ensure financial stability for smallholders.
“The regulations will spell out payment timelines. The Act stipulates that 50 percent should be paid to farmers upfront, and the balance within three months. This will address cash flow challenges while ensuring that farmers receive their dues promptly,” Mutai explained.
Furthermore, the reforms set a bold target for local industrialization, aiming to ensure that 40 percent of Kenya’s tea is value-added within the country rather than being exported in bulk.
Mutai pointed out the current imbalance in the sector’s export model: “We are 95 percent exporters of packed teas, and we’re engineering to make sure that 40 percent of what we produce is value-added within the country.” By emphasizing consistent green leaf quality and embracing digital technology, the government and the Tea Board aim to attract premium international buyers and secure a competitive edge for Kenyan tea on the global stage.