Uganda's tea industry has been a subject of neglect by both the public and private sector. Despite the neglect, tea is Uganda's third export by value. In 2012/13, Uganda earned US$ 72 Million from exporting 63,456 tonnes of tea. Tea exports accounted for 2.8 percent of total Uganda's exports and 0.36 percent of 2012/13 Gross Domestic Product (GDP). Owing to its ability to generate exports revenue, tea is earmarked among the ten priority crops in the agricultural sector Development Strategy and Investment Plan (DSIP).  Therefore, tea is a viable tool for driving the vision 2040 agenda.

In spites of its contribution to the economy, Uganda's tea industry faces many structural challenges. For instance, it cannot compete favourably with other tea sectors such as the one in Kenya. In 2012/13 Kenya earned US$ 1.23 Billion from exporting 429, 000 metric tonnes. Kenya's earnings represented 22 percent of total Kenya exports, and 3.2 percent of Kenya's GDP.

Challenges of the tea sector 

In the past, the Ministry of Agriculture, Animal, Industry and Fisheries (MAAIF) and development partners such as the World Bank Group and the European Union have implemented several interventions to rehabilitate the smallholder sector and to intensify the productivity of the estates sector. Admittedly, the responses by the private sector to such incentives have been sticky. As such, the tea industry has utilized only 10 percent of the 200,000 Ha identified in the DSIP for tea expansion in Western and Northern Uganda.

Tea research in Uganda is also weak. The extension services provided by National Agriculture Advisory Service (NAADS) have limited technical expertise on tea. And, the current number of processing facilities is not consistent with the rate of tea plucking.

The above challenges are partly because the Uganda's tea sector operates in a complex polity. One is that the tea sector in Uganda has traditionally been a private sector venture. Operating under self-regulation without a comprehensive tea policy and a tea authority.

A second factor is that estates are more productive than small holders. But there is no room for expansion of estates. Most of the 200,000 Ha identified by the DSIP for tea expansion is owned or utilized by the smallholders. Therefore, the dominant strategy to expand tea production is through supporting small holders and intensifying the production of the estates. 

A third factor is that tea cannot be grown everywhere in the country. The soils consistent with tea growing must necessarily be acidic (PH6) with annual precipitation of 1500mm.  As such, geographical location affects the quality of tea. Only tea grown on highlands attracts premium prices. 

Why a tea policy is needed

Uganda's policy makers are now faced with a set of question: Do we need a tea authority and a comprehensive tea policy or are the current structures at MAAIF working? How can a tea authority and a comprehensive tea policy alter the tea sector's performance?

I am persuaded by those who argue for a tea authority. First, the private sector does not have the capacity to invest in capital intensive infrastructural projects required in the tea sector, such as provision of energy and paved road. In such a case, a tea authority is imperative to coordinate and set the ground rules for a private public partnership. 

Second, a tea authority is needed to enforce the design and location of tea processing facilities. For instance, the tea growing areas of Kabale and Kisoro are covered by 800 hectares of tea with 25 percent of the area undergoing regular plucking. Ordinarily, at least two processing facilities would be placed near those tea planting zones.

Over concentration of processing facilities in one location leads to stiff competition for green leaf especially during the dry seasons. Therefore, Uganda should explore the Kenyan processing model, where for every 500 Ha of tea, with 1.5 tonnes per hectare productivity there is a single line Cut Tear and Curl (CTC) factory with a capacity to wither and process 750 tonnes of black tea or 3500 tonnes of green leaf with an average out turn of 23.5 percent. 

Third, a tea authority is required to not only regulate the sector, but to also collect reliable tea statistics, collect a cess from producers for funding research on inputs such as vegetative propagated (VP) cloned tea which is consistent with Uganda's agro climatic conditions.

In addition, the authority would standardize quality, promote tea in international fairs, promote branding, enter into bilateral export agreements with other markets other than relying on the Mombasa Tea Auction, promote the use of land as a basis for tea venture and organize farmers into groups to ease use of fertilizer and access to credit. 

Indeed, the popularization of the 2005 draft comprehensive tea policy is long over due. Reviewing, passing into law and implementing the 2005 draft tea policy will support growth, productivity, and create incentives for the smallholder farmers and estates and restore certainty among stakeholders.   

Lakuma is a research analyst at the Economic Policy Research Centre. 

This article first appeared in the New Vision of Tuesday, June 17, 2014 

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