Tea Directorate PRESENTATION ON KENYA TEA INDUSTRY PRESENTATION OUTLINE INTRODUCTION THE PROBLEM STATEMENT REVIEW OF STATISTICS DISCUSSION POINTS INTRODUCTION Tea Industry Contributes ID: 602962
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Slide1
Agriculture, Fisheries and Food Authority
Tea Directorate
PRESENTATION ON KENYA TEA INDUSTRY Slide2
PRESENTATION OUTLINE
INTRODUCTION
THE PROBLEM STATEMENT
REVIEW OF STATISTICS DISCUSSION POINTS Slide3
INTRODUCTION
Tea
Industry Contributes
immensely to socio-economic development of the
country :It is the leading foreign exchange earner-26% of the total foreign exchange earnings. 7% of the GDP.livelihood support to over 5 million Kenyans. Contributes to Rural development and employment in 18 Counties .
95% of Kenya tea is exported to over 60 market destinations.
In
2014,
the tea industry earned the country
Ksh. 101
Billion in export earnings and
Ksh. 22
Billion in local
sales
.
Tea Industry is a strategic subsector in the overall economy of Kenya
.Slide4Slide5Slide6Slide7
ROLES OF THE TEA DIRECTORATE
Guided by Crops Act 2013, the Directorate conducts:
Regulation and compliance
Industry planning and development
AdvocacyMarket and product Research Trade Promotion Organizational capacity and service delivery enhancementSlide8Slide9
A SUSTAINABLE AND GLOBALLY COMPETITIVE TEA INDUSTRY
GOVERNMENT
(NATIONAL & COUNTY)
TEA DIRECTORATE AND TEA RESEARCH Slide10
INDUSTRY VALUE CHAIN
TEA GROWERS 0VER 700,000)
BLENDESRS AND BRANDS
BUYERS(80) MANUFACTURE (120)WHOLESALERS
RETAILERS
AUCTION
CONSUMERS
NATIONAL GOVERNMENT (POLICY FORMULATION)
COUNTY GOVERNMENT (POLICY IMPLEMENTATION
)
TEA DIRECTORATE (REGULATION AND DEVELOPMENT )
TEA RESEARCH INSTITUTE (RESEARCH & INNOVATION )
WHAREHOUSING
BROKERS Slide11
PROBELEM STATEMENT
Year 2013
/2014 witnessed
a drastic turn of fortunes with tea prices at the Mombasa auction, the main outlet for the smallholder farmers, dropping significantly by 30%Consequently, (KTDA) failed to declare the initial lump sum payment to farmers, popularly referred to as “Mini-bonus, causing a national outcry by tea growers.Slide12
PROBLEM STATEMENT
Government raised concern about the situation
and decided to look into ways to mitigate against the negative impact of the low prices so as to ensure that the tea sector remains sustainable and competitiveThe President gives a directive in June 2014,on the establishment of a Price Stabilization Fund to cushion farmers in times of low pricesSlide13
PROBLEM STATEMENT
Overall objectives of
this
assignment is to implement the Presidential Directive by recommending the most appropriate price stabilization scheme for the tea growers in Kenya Slide14
RISING COST OF PRODUCTION Slide15
PRODUCTION DATA
No of
Growers
Estates32,786
SmallHolders
595,152
Total
627,938
Area(ha)
Production
65732
150,981,510
124985
218580414
190,717
369,561,924 Slide16
PRODUCTION DATA
10 YEAR SUMMARY OF GREEN LEAF PAYMENT
(SMALLHOLDERS) FINANCIAL TOTAL WEIGHT FIRST
SECONDTOTAL1ST & 2NDYEAR DELIVERED BY FARMERS
AVG. PAYMENT
AVG. PAYMENT
AVG. PAYMENT
PAYMENT
KGS
RATE/KG/GL
RATE/KG/GL
RATE/KG/GL
KSHS
2004/2005
753,925,730
9.00
11.75
20.75
15,475,299,489
2005/2006
727,824,118
9.00
15.27
24.27
17,660,692,876
2006/2007
914,708,202
10.50
10.85
21.35
19,187,243,360
2007/2008
813,641,578
10.50
14.13
24.63
19,781,669,971
2008/2009
726,269,270
10.50
24.66
35.16
25,411,417,801
2009/2010
888,704,028
11.50
31.52
43.02
38,228,154,316
2010/2011
837,370,088
12.00
36.40
48.40
40,525,847,694
2011/2012
906,274,568
12.50
37.51
50.01
45,317,098,263
2012/2013
1,123,909,348
14.00
31.65
45.65
51,303,667,428
2013/2014
1,124,328,441
14.00
17.61
31.61
35,543,621,836Slide17
PRODUCTION DATASlide18
PRODUCTION DATASlide19
PRODUCTION DATASlide20
PRODUCTION DATASlide21
PRODUCTION DATASlide22
PRODUCTION DATA
(i) Manufacturing/Processing Costs
2009/10
2010/11
2011/12
2012/13
2013/14
Labour
12.97
11.17
12.54
12.24
13.00
Furnace Oil
4.08
0.92
1.18
0.40
0.09
Electricity
9.27
9.23
11.70
9.66
10.40
Fuelwood
3.89
5.91
7.12
7.68
7.84
Leaf Collection
4.26
3.30
3.92
3.66
3.54
Packing Expenses
5.56
5.87
6.63
6.49
6.23
Administrative Costs
11.12
8.81
10.40
9.42
10.21
Management fees
6.34
6.70
6.39
4.91
Financial Costs
9.27
10.24
11.04
9.43
10.27
Selling Expenses
5.03
5.66
5.43
6.62
Sub-total (K.sh)
60.42
66.82
76.89
70.8
73.11
Sub-total (USD)
0.78
0.84
0.87
0.79
0.85
25%
27%
27%
24%
35%Slide23
PRODUCTION DATA
(ii) Farm gate Costs
2009/10
2010/112011/12
2012/132013/14
Fertilizer
5.67
4.78
6.96
6.35
5.64
Plucking Labour
32.00
25.50
32.00
39.90
34.00
Miscelleneous -weeding & other costs
17.00
17.00
17.00
16.53
14.88
Sub-total
54.67
47.28
55.96
62.78
54.52
COP Grand-total (K.sh/Made Tea)
115.09
114.10
132.85
133.58
127.63
COP Grand-total (USD/Made Tea)
1.49
1.44
1.50
1.50
1.48
AUCTION PRICE AVERAGE-smallholder
3.11
3.07
3.20
3.26
2.43Slide24
PRODUCTION DATA
MARGIN/KG OF MADE TEA
1.62
1.631.70
1.760.95Smallholder average area under tea-ha
0.5
0.5
0.5
0.5
0.5
Smallholder productivity/ha
1,609
1,956
1,771
1,749
1,962
Smallholder average production/Year
804.55
977.98
885.66
874.43
980.88
Smallholder average Net Margin/Year
1304.59
1592.97
1509.26
1541.93
928.53
Smallholder average Net Margin/Year/K.SH
100,871
126,122
134,038
137,623
79,893
Smallholder average Net Margin/Month/K.SH
8,406
10,510
11,170
11,469
6,658
Smallholder average Net Margin/Day/USD
3.6
4.4
4.2
4.3
2.6
Working parameters
Exchange Rate
77.32
79.17
88.81
89.25
86.04
Fertilizer Cost per Bag of 50 Kgs
1,825
1,871
2,466
2,221
2,214
Fertilizer application-Bags/ha
5
5
5
5
5
Cost of fertilizer per ha
9,125.00
9,355.00
12,330.00
11,105.00
11,070.00
Productivity-Made Tea/Ha (Kgs)
1,609
1,956
1,771
1,749
1,962
Cost of fertilizer per Kg of Made Tea
5.67
4.78
6.96
6.35
5.64
smallholder average area under tea-ha
0.5
0.5
0.5
0.5
0.5Slide25
DISCUSSION POINTS
FAO COMPOSITE PRICES INDICATE A PRICE DROP OF 12% WHILE KENYA AUCTION PRICES DROPPED BY 30% IN 2013/14
THE NATIONAL TREASURY DOES NOT SUPPORT A PRICE STABILISATION FUND,CITING THE EXPERIENCE OF THE COFFEE STABEX FUND (2000),AMONG OTHERS
KTDA COMMENTS ARE THAT WITH REDUCED GROWER EARNINGS ,ITS NOT FAIR TO BURDEN THE TEA GROWER WITH ADDITIONAL CONTRIBUTIONS TO THE FUNDSlide26
OPTIONS FOR DELIBERATIONS
A PRICE STABILISATION FUND SUPPORTED BY GOVERNMENT,INDUSTRY OR A MIX OF BOTH
USE MARKET BASED RISK APPROCHES ,FORWARDS ,OPTIONS ,FUTURES ETC
USE OF SUBSIDIES INPUT SUBSIDIES ETC Slide27
OPTIONS FOR DELIBERATIONS
USE OF CROP INSURANCE APPROCHES
VALUE CHAIN INNOVATIONS
A MIX OF THE ABOVE OPTIONS BASED ON SHORTTERMAND MEDIUM TERM SOLUTIONS Slide28
THANK YOU