How value addition of tea products by kenya tea development agency- ktda can enhance international competitiveness and earnings of kenyan tea
Gatobu, Doreen K
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The study sought to assess how value addition of tea products by KTDA can enhance International competitiveness and earnings of Kenyan tea, identify incentives that can encourage value addition in the sector and propose value addition activities with the potential of increasing Kenya’s tea earnings and competitiveness in International Market. Kenya exports its tea to the world market in bulk which is mainly used for blending low quality teas from other countries. Consequently bulk tea fetches low prices leading to depressed revenue for tea growers and low foreign exchange forthe country (Tea Board of Kenya, 2009b)Kenya’s potential to add value to agricultural produce is largely unexploited. This makes the country vulnerable to fluctuating and declining commodity prices and increasingly fierce competition from cheap imports (Government of Kenya, 2011). Kenya has only managed to increase the volume of Value Added Tea sales from under5% to about 12% of total sales over the last few years (Tea Board of Kenya, 2009a). A comparison between Kenya’s and Sri Lanka’s tea export market shows that Kenya exported more tea in volume than Sri Lanka in 2009 but Sri Lanka earned more from its exports than Kenya did. In 2010, Kenya earned USD 1.23 Billion from exports of 362 million Kgs of its own tea as well as re-exports of 79 million Kgs of other origin teas, while Sri Lanka earned USD 1.30Billion from its export of 296.3 million Kgs owing to higher prices and more valued added shipments(Tea Board of Kenya, 2011a).Kenya needs to scale-up activities such as processing, branding, quality certification and accreditation that increase the market value of primary products (Government of Kenya, 2011).This research used a case study approach. A case study was adopted to allow for a one-time collection of data from the sample population. Data was collected through interview guides administered to KTDA Managers. Secondary data on tea export figures for value added tea and bulk tea from the Tea Board of Kenya was used to supplement the primary data collected. Findings showed that value addition increases tea earnings with 83.3% of the factories indicating that value addition increases earnings by up to 25%. Industry experts indicated that the price of value added tea was higher than that of bulk CTC tea with the lowest price difference ranging between 0 to 25% and the highest price difference ranging between 76 to 100%. The research established that value addition activities in Kenya’s tea sector increase tea earnings. Monetary and fiscal incentives, promotional support, branding support and investments in overseas markets are incentives that can encourage value addition in Kenya’s tea sector. Packaging, branding and blending have the highest potential of increasing Kenya’s tea earnings. Although flavouring and instant tea were rated low in terms of increasing Kenya’s earning potential, the research proposed that if positioned to meet the growing demand for convenient forms of tea, they have the potential of increasing Kenya’s tea earnings. Other tea varieties such as Purple tea, Black Orthodox, Green Orthodox and Green CTC tea also have the potential of increasing Kenya’s tea earnings. The research identified areas for further research which include: the role of diversification into other tea varieties in creating new markets for Kenyan tea, the role of value addition in creating employment in Kenya’s agricultural sector and the contribution of tea value addition activities to Kenya’s agricultural GDP among other areas.