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Agriculture, Fisheries and Food Authority Agriculture, Fisheries and Food Authority

Agriculture, Fisheries and Food Authority - PowerPoint Presentation

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Agriculture, Fisheries and Food Authority - PPT Presentation

Tea Directorate PRESENTATION ON KENYA TEA INDUSTRY PRESENTATION OUTLINE INTRODUCTION THE PROBLEM STATEMENT REVIEW OF STATISTICS DISCUSSION POINTS INTRODUCTION Tea Industry Contributes ID: 602962

production tea smallholder data tea production data smallholder total industry average 2013 year price costs government prices margin fund payment fertilizer directorate

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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

.Slide4
Slide5
Slide6
Slide7

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 enhancementSlide8
Slide9

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