Iced tea, soap, shampoo: How Sri Lanka exported less tea than Kenya, but earned more

Iced tea, soap, shampoo: How Sri Lanka exported less tea than Kenya, but earned more

President Uhuru Kenyatta has decried the lack of value addition on Kenyan tea as one of the reasons why the green gold is not bringing in as much money.

Mr. Kenyatta, speaking in Mombasa said Kenya still exports its tea in bulk form while countries like Sri Lanka are adding value to theirs and end making a lot more money.

“In 2018, Kenya exported 476 million kilograms of tea, earning 140 billion shillings. Sri Lanka on the other hand exported 288 million kgs, which is about 60% of our exports. However, they earned an equivalent of 150 billion shillings,” said the Head of State.

“The higher earning for lesser tea than ours is largely due to their ability to export close to 50% percent of their teas in value added form, compared to us who export 98% of our tea in bulk form. To earn more value from our tea, we need to add value to it before exporting it.”

According to Investopedia, the term “value add” describes the enhancement a company gives its product or service before offering it to customers. It can be considered as an extra special feature added by a company or producer to increase the value of a product or service.

But how does Sri Lanka do it?

The Sri Lanka Export Development Board, on their website, lists samples of their value added product range as including; green tea, flavoured tea, organic tea, instant tea, iced tea, as well as ready-to-drink tea.

Some of the relatively newer products the board also claims to have added to this range are tea-based soap, bath gel, shampoo and cosmetic products.

Sri Lanka provides more value to its tea more than the other tea producing countries and this helps it fetch a higher price in the global market.

To further help the Kenyan tea do better in the export market, President Kenyatta said: “Going forward, I have directed the National Treasury, the Ministry of Trade and Industry, the Ministry of Agriculture and the Attorney General to finalise and gazette the newly developed Tea Regulations (2019) within the next two weeks.”

“These regulations include: establishment of the Green Leaf Pricing Formula Committee to determine the formula for pricing of green leaf; the establishment of a self-sustaining stabilisation fund to cushion farmers against price fluctuations and ensure implementation of guaranteed minimum returns; establishment of Kenya Tea Council; and regulation of the volume of teas sold through the Auction and through Direct Sales/ Direct Contracts to be set at 80% Auction and 20% Direct Sales window.”

President Kenyatta also ordered the Agriculture Ministry and the Competition Authority of Kenya (CAK) to strip off roles of Kenya Tea Development Authority (KTDA) directors as a recourse means to recoup gains for tea producers.