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Calls for Kenyan government action to address falling tea prices

Press reports in November 2013 showed increasing concerns in Kenya's tea sector following 7 months of falling prices for Kenyan tea, with anxieties over significant damage to the sector if the price trend continued unchecked. Tea prices had reportedly fallen to their lowest level since 2008. Indeed, average international tea prices in October 2013 were 40% below their 2009 peak and 40% below the October 2012 level.

In January, in response to these price declines, the Kenya Tea Development Agency (KTDA) called on the Kenyan government to "scrap taxes levied on green leaf", provide fertiliser subsidies for tea production and establish a stabilisation fund to cushion farmers from price volatility.

KTDA pointed out that "Kenya's tea was the most expensive at the Mombasa auction compared to the rest of East African nations including Uganda, Rwanda, Tanzania and Malawi, due to tax charges and high production costs," observing that this was leading buyers to favour non-Kenyan teas at the auction.

Press reports indicated troubled times in the Kenyan tea sector, with some Kenyan politicians calling for an end to KTDA's marketing monopoly, despite the 12.7% increase in sales revenues achieved by KTDA in the 2012/13 financial year. This was a result of increased volumes, with an increase of 5%/kg being paid to producers, despite a 2% decline in the average net selling price per kg in 2013.

The Tea Board of Kenya for its part is leading a crackdown on multinational companies that deal with tea "hawkers" (i.e. traders who by tea in violation of contractual commitments between growers and processing companies), by threatening to withdraw the multinationals' trading licences.

Meanwhile, KTDA continues efforts to promote sustainable tea production, having joined up with Unilever and the Dutch IDH Sustainable Trade Initiative to boost tea production by 30% through extending existing programmes for the promotion of best practices in tea plucking, pesticide use, soil management, or other agronomic practices. KTDA personnel claim that the first phase of this initiative, which has been in progress since 2009, resulted in "higher yields, better quality, increased income, [and] improved water management".

KTDA is also continuing its efforts to promote the full Rainforest Alliance certification of KTDA-managed tea processing factories. So far, 54 factories have been certified, while a further 12 are at various stages of certification. This forms part of KTDA's efforts to "ensure that all its tea factories comply with international standards in order to win the trust of the buyers and consumers, who... are keen on the quality of tea that they buy".