Special Paper No. 17 2017 on Transforming Agribusiness, Trade and Leadership: A Capacity Needs Assessment of the Tea Value Chain in Kenya

Abstract

This report analyses the institutional and human capacities of the tea value chain in Kenya. This is necessitated by the need to initiate transformative actions necessary for enhancing the sub-sector’s productivity and contributions to national economic growth and development. The transformative agenda is also aimed at strengthening agribusiness trade and international competitiveness as envisioned in the Kenya Vision 2030. Tea plays an important role in Kenya’s socio-economic development. Tea is the leading industrial crop in terms of its contribution to the GDP. In 2016, tea accounted for 40 per cent of the marketed agricultural production and contributed 25 percent of total export earnings amounting to USD 1.25 billion (KNBS, 2017). In addition, tea provides livelihoods to approximately over 600,000 smallholders who contribute approximately 60 per cent of total tea production. This notwithstanding, only 14 per cent of tea exported is value added and the remaining is sold in bulk form (GoK, 2016). The low level of value addition results to an estimated loss of USD 12 per kilogram of tea. As a result despite Kenya being the leading exporter of tea in terms of volumes, the country receives low earnings compared to other exporting countries due to low value addition. For instance, in 2013, Kenya’s exported 131 metric tonnes more than Sri Lanka but it earned USD 0.3 billion less.