Uganda loses revenue due to exporting raw tea

Tea exports fetched Uganda Shs184.8 billion last year.

KAMPALA/LONDON

Efforts by East African countries to grow its tea industry continue to suffer setbacks due to limited capacity for value addition, industry players have said.

Uganda Tea Cooperation general manager Rogers Siima told the Daily Monitor in an interview that although they would have wanted to export finished products to European markets, players are still constrained by huge capital requirements and strict European standards.

“Penetrating the European market with a finished product that can just go on their supermarket shelves is complicated. They have strict standards that will make it difficult for us to export finished products to their countries,” Mr Siima said.

This means the country continues to lose millions of dollars in revenue. Tea fetched Uganda $73.9 million (Shs184.8 billion), out of the $2.35 billion worth of exports last year, up from Shs72.1 million out of $2.1 billion total exports in 2011, although the figure would have been higher if the country was exporting a finished product.

Although a kilogramme of tea at the Mombasa Tea Auction in Kenya costs about $1.88 (about Shs4,700) per Kg, when processed and reshipped back to Uganda, a 50g tea pack costs Shs4,000. A kilograme of tea is equivalent to 20 50g tea packs. It should, however, be noted that various types of tea from other countries is blended together to produce a final product.

European countries including Twinings Tea Factory, a United Kingdom-based firm import some of the tea requirements they use to produce their Twinings brands from East Africa including Uganda. Twinings with an annual turnover of about £670 million, also imports tea from India, China and Indonesia among others, which it blends together to produce the final product that is then re-exported to 120 countries across the world including Uganda.

Twinings Tea Senior Blender in charge of global product development Mike Wright told journalists that teas from Uganda and Kenya have a lot of colour and strength and can cut through their blend very well to produce what customers want. Players in the tea sector in the region are only able to add value up to the stage of crashing the dried leaf and then sell it through the Mombasa Tea Auction to European markets.

fkulabako@ug.nationmedia.com