The National Agriculture Export Board (NAEB) has drafted a new handling model to boost quality tea exports along value chain and remain competitive.
This comes in the wake of falling tea prices at the Mombasa auction.
According to Issa Nkurunziza, NAEB’s tea division manager, the new green leaf handling model, seeks to boost farmers and factories with skills and have them rewarded for investing in value addition.
The model, still in draft form will be shared with farmers, cooperatives and tea factories once it’s approved, Nkurunziza told The New Times.
It highlights how much farmers and factories will get as the national average price once they have met the quality benchmark.
For example, farmers scoring more than 75 per cent (above the green leaf quality benchmark of 70 per cent), they will get an extra 10 percent of the 40 per cent market price while those whose quality fails to meet the standards will lose 10 percent.
“It also means that farmers whose quality exceeds 75 per cent will take home 50 per cent while those who fail to meet the quality will receive only 30 per cent,” Nkurunziza said, adding that they are also encouraging farmers to save as prices continue to decline.
Prices drop marginally
Meanwhile, tea prices have declined marginally from $3.29 per kilo in December 2015 to $2.97 per kilo January 2016 at the Mombasa auction.
Sector players at the Mombasa based auction have attributed low prices to increased volumes.
Tea volumes equally dropped from 9.04 million kgs during the previous auction to 8.9 million kgs last week.
This decline marks the sixth time in a row that the beverage has been losing ground since the beginning of the year.
The situation is likely to remain at the same level but that earnings could dip due to adverse changes in the exchange rate and increased global production.
Gaspard Nsanzimfura, a tea farmer said that if they are to remain competitive, they don’t have a choice but to embrace quality along value chain as tea prices continue to decline.
Rwanda’s tea exports increased in both value (40 per cent) and volume (8.9 per cent) in 2015.
The sector fetched almost $73million in 2015 up from a mere $52million in 2014 according to Central Bank statistics.
NAEB targets to increase tea export receipts to $94.9 million by 2018.
Meanwhile, NAEB seeks to increase the average production level to 3,000 metric tonnes of dry tea per annum.