Ugandan tea dips into the red

Ugandan tea dips into the red

Uganda's plantations have been neglected since the 1970s

Uganda's small but once-buoyant tea industry has become desperately unprofitable, the Uganda Tea Association (UTA) has announced.

Over the past decade, Uganda has trebled production, in an effort to diversify away from its traditional reliance on coffee.

But prices at the market in Mombasa, Kenya, where most Ugandan tea is sold, have fallen sharply.

Now, says UTA head Isaac Munaabi, the cost of producing Ugandan tea and transporting it to Mombasa is 23% higher than the wholesale selling price.

Power struggle

Mr Munaabi laid most of the blame for the industry's woes on Ugandan electricity, whose high price and erratic supply make producing tea in Uganda more expensive than in neighbouring Kenya.

But he also acknowledged that the industry had been badly run, and was especially starved of investment during the 1970s.

Ugandan producers have spent over $200m (£124m) since the 1970s on upgrading their production, Mr Munaabi said.

But more investment is needed, in particular some $56m to reclaim 3,000 hectares of nominally tea-growing land from the bush.

Going upmarket

The plight of the Ugandan tea industry is a familiar one.

Major producing countries around the world have felt the pinch in recent years, as a glut of production has coincided with slumping demand in key markets such as Europe.

Producers think making tea trendy is the way forward

Some cannier producing countries - notably India - have shifted resources to marketing and branding tea, in an effort to carve out a reputation as high-quality producers capable of charging premium prices.

The longer-term aim, it is hoped, is to reinvent tea as an upmarket and fashionable drink, in the way that coffee was reinvented in the 1990s.

African producers have so far failed to follow suit.

But Uganda, frustrated at being dominated by Kenya, has toyed with selling its tea directly to Western Europe, rather than relying on the weak prices on offer at the Mombasa auctions.