Over-reliance on few export destinations affecting tea returns

Business Daily Kenya:  Political instability in major destinations in the world is eating into Kenya’s tea exports, a new report reveals. T...

Business Daily Kenya: 

Tea farming. Photo/Courtesy

Political instability in major destinations in the world is eating into Kenya’s tea exports, a new report reveals. The report “Transforming agribusiness, trade and leadership: capacity needs assessment of the tea value chain in Kenya” said more tea export market segments continue to record declines.

Released yesterday by the Kenya Institute for Public Policy Research and Analysis (KIPPRA), the report blamed over-reliance to a few markets and low value addition for the current situation.

KIPPRA policy analyst Nancy Laibuni said Kenya overreliance on a few markets was partly because of low investment in promotion and marketing.

“Exports to major markets have been declining expect for Pakistan, Egypt and Russia. Kenya needs to focus on sustaining the current markets as it endeavours to access markets in the high-consuming countries including Turkey, Morocco, Nigeria, and Ireland, currently not covered,” she said.

Between January and June this year, Laibuni said, exports to United Kingdom declined by 19 per cent, Afghanistan by 12 per cent, Yemen by four per cent and Kazakhstan by 12 per cent.

Kenya exports 84 per cent of its tea to eight countries with half of this exports going to Pakistan and Egypt. The remaining 16 per cent go to 67 other destinations.

New market destinations include United Arab Emirates (UAE), West and Central Africa and Russia. “The narrow export base enhances vulnerability of Kenyan tea exports to central shocks.

For example, drop in tea earnings in Kenya in 2003 was attributed to political instability in Egypt and Sudan,” Laibuni added. Agricultural and Food Authority interim director general Alfred Busolo said understanding new preferences in the global market is required.

“The issue is no longer about volumes exported to various destinations but what the market wants. It can either be quality, taste among others,” said Busolo. He said value chain players need to pursue value addition and graduate from exporting black to specialty teas.

Kenya receives low earnings from tea despite high export volumes. In 2013, Kenya exported 131 tonnes more than Sri Lanka but it earned $300 million (Sh31.1 billion) less.

This is because Sri Lanka has concentrated on niche marketing and product differentiation as opposed to bulk marketing adopted in Kenya. Sri Lanka’s earning from branded teas was $0.72 million (Sh74.7 miilion) which is 63 per cent more than Kenyan’s earning from branded teas.

The post Over-reliance on few export destinations affecting tea returns appeared first on Mediamax Network Limited.

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