Rwanda Optimistic Tea Grouping Will Boost Prices

The National Agricultural Export Board (NAEB) believes that joining a tea cartel with the world's largest tea producers will boost the price of tea on the international market and thus make the sector more lucrative.

This follows an announcement last week on the International Tea Producers Forum that the world's biggest tea producers, including Rwanda, agreed to join forces with the prospect of controlling global prices for the beverage.

The countries produce more than 50 per cent of the world's tea and include Colombo, Sri Lanka, India, Kenya and Indonesia.

Tea experts in the country suggest that the decision could have been forced by the constantly fluctuating price of tea on the international market.

The international price of tea is currently at US$2.9 per kilo, down from US$3 last month, and up from US$2.78 a year ago.

"Rwanda is a big tea producer and working with other tea producing countries will make it easier to monitor the international situation of tea, as well as introduce collective bargaining power for our produce," Jean Damascene Gasarabwe, Head of the Tea Production Division at NAEB, told The New Times.

"The reality of such is still a long way to go but it is a step in the right direction for the future of tea production."

The tea sector in Rwanda employs over 50,000 farmers who earn between Rwf123 and Rwf155 per kilo they sell to tea companies.

The volume of tea produced last year fell to 22,563 tonnes from 24,067 tonnes in 2011.

However, owing to relatively good prices last year, export revenues from tea increased from US $ 61.9 million in 2011, to US$65.7m in 2012.

Rwanda's tea has steadily acquired international acclaim and attracted a commendable amount of foreign direct investments, the most recent by Scotland's second richest man, Sir Ian Wood, who announced plans to inject £7.5 million in the sector.

"Sir Ian Wood bought the Shagasha Tea industry and owns 60 per cent of its shares. He intends to hand over his shares to the farmers after seven years at no cost, which is good news to the tea sector," " Daniel Ufitikirezi, the head of asset and business management at Rwanda Development Board (RDB) told The New Times.

"We have worked with Sir Wood before; he has sunk US$9 million so far and is expected to invest a further $7.5 million. Thirty per cent of the Shagasha shares are owned by farmers and 10 per cent by the government.

Sir Wood also owns 55 per cent of Mulindi Tea Factory with the rest of the shares owned by the farmers.

Government targets to collect US$83 million from an increased volume of 28,600 tonnes of tea exports.

Rwanda's tea sector consists of 11 factories and six tea projects with an average annual production of 23,000 metric tonnes of dry tea.

Another three tea factories, costing over US$20 million, are expected to be operational by 2014, as a venture between the government and private investors.