Sicily K. Kariuki is Managing Director of the Tea Board of Kenya, the organisation responsible for promoting and regulating the tea industry in Kenya. A marketer by profession, Mrs Kariuki has a wide knowledge of the current multilateral trading environment. She has worked in Kenya’s commercial agricultural sector for 15 years, and moved from the horticultural sector to join the tea industry in 2006.
Growing competition, higher requirements … the world tea market is getting tougher, but Kenya is finding its market share in a very demanding market, says Sicily K. Kariuki, Managing Director of the Tea Board.
Q: How is the economic crisis in Europe affecting your tea sector?
Because the most important trading partner for Kenya is the UK, the impact of the crisis across the EU is not very direct. However, we have seen the market share in the UK coming down, from 69.2 million kilos in 2008 to 68.3 million in 2011, and 59.3 million last year. This trend can be attributed to increasing competition from other suppliers, to the fact that we have buyers in the UK looking for tea that is cheaper than Kenya tea – which is reasonably pricey because of its superior quality – but also to the fact that Kenyan exporters are directly accessing markets that were previously served via the United Kingdom.
So the lower UK market share for Kenyan teas cannot be attributed directly to the current crisis.
Q: The maximum residue levels (MRLs) in tea are becoming more and more rigorous, especially in the EU. How is this affecting Kenyan tea?
Again, the question of pesticide residues for Kenya is not material, as you may be aware that Kenya does not use pesticides on tea. In all of our locations and market conditions, we have minimal pests and diseases as Kenyan teas are grown at altitude. However, we do undertake regular monitoring, because tea is brought from the whole region to be sold at the Mombasa auction. And I am very excited to say that we have not been exposed to any residue: we have not had any cases of pesticide residue on Kenya tea. This is our strongest selling proposition in the 56 markets for Kenyan teas.
Q: Even if there is no pesticide residue issue at present, do you think Kenyan tea farmers will need to go further into the certification process?
For the time being, the pesticide residue issue is not very important. But because of likely changes in climate and other impacts on the environment, we cannot in the longer term rule out this possibility. But I want to look at the issue of certification a little bit differently, because already there are certification schemes working in the tea industry in Kenya, looking beyond pesticides and chemicals application to issues of a social nature – issues of environmental sustainability and labour practices. The certification will also ensure that the tea industry in Kenya meets the expectations of the various markets and secures the value proposition, with the accruing benefits flowing through the value chain.
Q: If you go a bit further in the process of certification, will this enable you to penetrate other high-value markets?
As I said, already there are several schemes of certification working within the industry and for us. From the point of view of the Tea Board, we are implementing the Code of Practice for the tea industry. And most of our industries have one or another certification touching on food standards, environmental aspects and lower cost standards. So that is already happening.
Many growers are already certified to the Rainforest Alliance standard and already have sufficient certification for their needs.
You will perhaps note that Kenya is finding its market share in very demanding markets, including Japan, where they are quite stringent in terms of food safety. We are also selling tea in Germany, in North America and we are also in the Middle Eastern markets, which are perhaps equally demanding. So what this means is that because of having no chemical residue in tea, the focus shifts to other long-term impacts like environmental sustainability – hence growers’ interest in the Rainforest Alliance certification.
Q: Most of your tea exports, if I am correct, are CTC teas (teas produced by the ‘crush, tear and curl’ manufacturing method), which are of lower value. What is your objective in adding value to the tea you export, and how do you go about doing that?
CTC does not describe value, but rather the processing method, which is ‘crush, tear and curl’. This method produces black tea that has the advantage of quicker brewing, and making more cups per kilogram.
Now, if we agree that adding value includes preparing the tea in consumer packaging, ready to place on the supermarket shelf, then that is already happening. So there is already added value in the black CTC tea in Kenya – 12% of our tea is in value-added form.
We would, of course, desire to see that percentage increase.
Q: How would you go about doing that?
It is really an investment decision because we at the Tea Board just facilitate, point out opportunities and talk to government to build incentives that would make investors want to invest more in value addition.
Q: China has developed very high-value niche markets for some of its teas. Has this changed anything in the international tea market and demand, and has it affected Kenya?
I can only confirm that with the opening up of China and their increasing involvement in the international market, the demand for tea is going up. China is the world’s largest producer, but you know also that the Chinese are interacting with the rest of the world, they are becoming more exotic and they want to try new things, some of which they can produce themselves, some of which they need to import. So there are opportunities for tea products from other countries such as Kenya. And, indeed, we are looking at China with a lot of interest.
Q: Broadly speaking, what are today your main trade issues regarding tea?
We would love to be in a world where artificial trade barriers are not brought on board and that there is a free flow of trade so that we are able to keep on with our trade. Our tea industry is the largest single commodity foreign exchange earner. So it is so important that we are able to access the world market uninhibited, because we have already gone beyond the food safety concern. That, to me, is very important.
Q: What market do you not have access to at the moment?
Although I do not wish to be specific on this, sometimes it takes a long, long time to get a breakthrough into some of these markets because of the standards that they set up. You will find standards being put at a level higher than those of the ISO (the International Organization for Standardization). And sometimes you put in a lot of effort, investments and time before you see the tea flowing freely.