Rwf23 billion to be invested in tea plantations, factories

Rwanda Tea Authority (Ocir-The), a government agency has said that it will require a financial outlay of US$41Million (Rwf.23 Billion) worth of investments in the sector if it is to achieve the 9,000 hectares of extra tea plantations it is targeting by 2012.
Premium Crop: Rwanda tea is highly rated as being of good quality within the global tea industry.
Premium Crop: Rwanda tea is highly rated as being of good quality within the global tea industry.

Rwanda Tea Authority (Ocir-The), a government agency has said that it will require a financial outlay of US$41Million (Rwf.23 Billion) worth of investments in the sector if it is to achieve the 9,000 hectares of extra tea plantations it is targeting by 2012.

The authority responsible for the supervision of the tea sector in the country also targets five extra factories by 2012 to process the extra production which is highly anticipated.

Rwanda Tea Agency  on its own may have to part with US$18.5Million (Rwf10.4b) to US$20 Million (Rwf11.2b)’, Anthony Butera, the  Director General of the parastatal , said in an exclusive interview with the New Times on Wednesday.

According to the officials of this public agency , they have already identified areas in Rubaya, Rutsiro, Karongi, Nshubi and Gatare on which to establish these additional  facilities.

‘We have identified areas in Nyaruguru in places called Muganza—kivu towards Nshiri and we have already put up nurseries and in some places we have started planting’, Butera said. ‘We started planting in 2007 and right now we may have gone to 2500 hectares already grown with plantation and we have identified investors both local and foreign’, he added.

This Western area of the country is anticipated to be designated as a tea belt due in part to the conducive conditions  it offers for tea growing such as has higher altitude.

‘We think  that the western region should be appropriately used for growing teas’, Butera said. According to Butera, a host of local and foreign investors have expressed interest of investing in the sector.

He said: ‘In Karongi we have contacts with Olyana holdings—from the USA, we have contacts with Rwanda mountain tea for Rutsiro, Mzee Mutangana for Muganza—kivu, we also have contacts with Rwanda Tea Trading for Gatare projects as well as Multi Sector Investment Group(MIG) for the Mushubi projects’.

Although these investors have not started putting up the factories, Butera said that government has largely endorsed their projects.

The investments could boost the crop’s production volume which fell by 1,000 metric tones from 20,400 metric tonnes in 2007 to 19,400 metric tonnes in 2008.

Butera attributed the fall in tea production to the harsh weather that hit the sector throughout last year. ‘We had frosts, hailstones and we had some prolonged sunny periods that led to slight underproduction compared to the previous year’, he added.

But, despite the slump in production, authorities say, there was remediation efforts that have been undertaken in relation to the expansion of the tea sector.

‘We intend to increase the marketing and we intend to improve yields per hectare. We think all these will help us in the movement of Gross Domestic Product (GDP) for the tea farmer from the present US$250 per annum to the vision 2020 US$900 per annum’, Butera said.

Rwanda largely depends on the Mombasa auction market for her tea sales, comprising 62 percent of the total sales but government is seeking to increase the direct sales which currently account for 37 percent of the total sales. The remaining one percent is collected through local sales. 

‘The performance of local sales has been poor, which was around 0.5 percent in 1994 and has only marginally moved to around one percent last year. We intend to move it to three percent by the end of this year’, Butera said.

In order for local sales to be increased, more investment especially in value addition such as rebranding  must be undertaken.

‘We intend to add-on more efforts in this local focus such as the purchase of machines to beef up local manufacturing so that we can satisfy the local demand’, Butera added.

Tea, one of the country’s top export crops in terms of value and volume is estimated to have fetched US$44 million last year and Rwanda Tea Agency now targets US$54m (Rwf.30.3b) this year.

By the end of November last year the sector had fetched US$42 million compared to US$34 Million in 2007.

According to Butera the 19 percent increment is partly due to due to very favourable prices throughout last year’s trading period.

He said: ‘the average prices for the year have been US$2.34 per kg sold in Mombassa while in 2007 it was US$1.74. So you can see that there is a very big difference’.

The difference in price may have been partly due to the problems that arose in Kenya in the first two to three months of the year that led to underproduction in Kenyan gardens and the subsequent undersupply on the market in Kenya that pushed the prices a little bit up.

‘It also may have been due to quality teas in this country because our gardens constantly produce some of the best teas in the world so we feel this year has been exemplary in terms of revenues’, he said.

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