A plunging dollar against the Shilling has dampened any hope for meaningful gains for farmers as auction tea prices moved down the ladder last week.Prices at the Mombasa auction fell to Shs1,870 ($1.1) from Shs2,380 ($1.4) earned at the end of last year. The dollar is trading on an average Shs1,690, which is down from the Shs1,890 at the end of 2006 losing Shs200. The situation worsened with an over enthusiastic production that flooded the market with new crop.
"Over production saw a lot of tea flooding the market thus bring about a fall in the prices unlike last year when we produced more but earned more because of the strong dollar," Mr Isaac Munabi, the executive secretary Uganda Tea Association, said.
Mr Munabi added: "The difference of Shs200 is a lot and makes life difficult for farmers to add value and does not only translate into the industry but the entire economy."
Tea is the fourth forex earner for Uganda after coffee, fish and gold. Last year out of the 35 million Kilogrammes of tea exported earned the country $50.8 million (Shs86.4 billion) down from $34.3 million (Shs58.2 billion) earned in 2005.
Concerns
Mr Munabi's main concern is that Uganda's tea situation could get worse if tea dealers do not find a means to sell their tea directly to buyers in Europe and elsewhere. Ugandan tea is exported to overseas markets as Kenyan tea, according to Mr Munabi.
He said an equivalent of a kilogramme of Uganda's tea re-exported as Kenyan, is used to prepare and serve 500 cups of tea in a London restaurant. Each cup costs about 3 Pound Sterling (Shs10,500) totaling to about Shs5.2 million.
Local consumption of tea is still very low at 5 per cent and in order to boost the culture of drinking tea, UTA is embarking on a campaign to register all packers countrywide
"Trade barriers are hindering Uganda from exporting directly such as the standard requirements. But since we are negotiating in the Economic Partnership Agreement (EPA) as requirement of the World Trade Organisation (WTO) this issue may be solved," Mr Munabi said.
He adds that Uganda to be able to compete favourably needs to invest in research for new high yielding breeds as well as managing tea production right from the plantation.
"The bushes (Plantations) available are very old which affects the yields and the quality is a bit low compared to Kenya's.
More than 50,000 people are directly employed by the industry and at least 400,000 are indirect beneficiaries.
Kabarole, Kyenjojo, Mityana, Hoima, Mukono, Kanungu and Kibale districts are the main tea growing areas in the country.
Kenya leads in production in East Africa with more than 390 million kilogrammes Uganda and Tanzania take the second and third position with 36 million kgs and 30 million kgs per annum respectively.
Globally tea is the most popular beverage after water. About 800 million cups of tea are consumed daily. Today India is the world's largest producer of tea, harvesting an estimated 700,000 metric tonnes annually, followed by China at about 580,000.
Source: allafrica.com
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