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Last Updated:  Tuesday, 18 March, 2003, 13:04 GMT
Tea growers fear price falls

By James Whittington
BBC Africa Business Editor

Ugandan tea picker
Kenyan and Ugandan growers are suffering
Kenya's tea exporters are struggling to cope with falling prices which they fear could threaten the viability of their industry.

Tea is a major export crop for Kenya, outflanking coffee and contributing 20% of the country's foreign earnings.

But a mix of falling demand and rising output has caused a sustained drop in prices.

Part of the problem, Kenyan tea traders say, is that South East Asian countries such as Indonesia and Vietnam have increased the amount of tea they are growing.

Asian challengers

"Vietnam, which expanded their coffee industry to the detriment of Kenya - they are going to expand their tea industry without a doubt," says Norman Wilson, managing director of Africa Tea Brokers in Mombasa.

Mombasa is Kenya's main tea market and the site of weekly auctions.

Tea brokers buy the crop from producers and sell it on for export.

If Vietnamese and Indonesian growers continue to undercut Kenyan tea prices "obviously Kenya is going to suffer enormously", says Mr Wilson.

Ready to quit?

Many big growers are casting around for alternative crops, says Nigel Sandys-Lumsdaine, managing director of planters Williamson Tea Kenya.

Timber, which is in short supply in Kenya, is a popular choice.

Tea growing, however, remains popular among Kenyan smallholders.

Tea drinker
Prepacked sales to European supermarkets could help

This is partly because the Kenya Tea Development Authority guarantees to give small farmers monthly payments for their tea crop.

While Kenya's new government is keen to encourage small tea farms to create jobs, there is a risk that this could worsen the problem of over-production, causing further price falls.

To avoid this the Tea Board of Kenya wants to see policies that attract investment into other parts of the industry, particularly those that add value to the crop before export.

Better boxes

"Exporting the tea in this raw form as we do at the moment, we do not realise good value for our tea," says Kephar Omwega, a licensing officer at the Tea Board.

Better packaging would help raise prices, he says.

Packaging tea in Kenya for sale in European supermarkets has been tried before.

At least one attempt failed in a spectacular fashion a few years ago because of the poor investment environment and a flawed marketing policy.

But the new government wants to change all this. It has promised business-friendly policies.

If this happens, Kenya could earn far more than it does at the moment as the biggest exporter of black tea.




WATCH AND LISTEN
Norman Wilson, Africa Tea Brokers
"We get the sample, which is carefully weighed..."



SEE ALSO:
Country profile: Kenya
05 Mar 03 |  Country profiles
Ugandan tea dips into the red
13 Mar 03 |  Business
War threatens South Asian tea
06 Feb 03 |  Business
Uganda tea exports fall sharply
29 Aug 02 |  Business
India plans tea campaign
25 Mar 02 |  Business


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