After three years of grappling with declining prices on international market and low productivity due to unfavourable weather conditions, tea businesses could see a rebound in 2020.
The average price of Rwanda tea reduced from $3.21 per kilogramme in 2017 to $2.93 a kilogramme in 2018, before further dropping to $2.79 per kilo in 2019 on the international market.
The drop in international market prices between 2018 and 2019 saw tea exports revenue decrease by almost 5 per cent from $90.4 million in 2018 to $86.3 million in 2019.
Surrender Jhijaria, the senior manager at Pfunda Tea Company in Western Province, told Doing Business last week that over the last three years, companies like his grappled with low production owing to unstable weather conditions.
"The last two to three years the weather has been erratic, and that has led to production going down a little bit,” he said during an interview last week in Rubavu district.
Pfunda tea factory is one of the oldest tea factories having begun its operations in 1965.
The average price of Rwanda tea reduced from $3.21 per kilogramme in 2017 to $2.93 a kilogramme in 2018, before further dropping to $2.79 per kilo in 2019 on the international market. File.
According to Jhijaria, their production has reduced for the past three years at the rate of between 1 per cent and 2 per cent, but they say they expect the production to go up this year.
"We expect to make some 2.6 million kilogrammes this year from 2.5 million that we made last year,” he said, adding that they have a potential of making 4 million kilogrammes per annum in the medium term.
Thushara Pinidiya, the Director of Nyabihu Tea Factory which owns a 1,043.54-ha tea estate in the Western Province, told Business Times that they have also experienced the effects of the reduced prices.
"However, we are optimistic that this year we could get some good productivity if weather is favourable,” he noted.
Last year, the company sold 1.5 million kilos of tea with Pinidiya saying that they anticipate to sell 1.8 million kilos and 2 million kilos this year and 2020, respectively.
Rwanda projects to generate $102 million (about Rwf95.7 billion) from tea exports in the 2019/2020 financial year, up from $83 million (about Rwf78 billion) it earned in the previous year, according to the National Agriculture Export Board (NAEB).
For that to be realised, farmers suggest getting more incentives to deal with weather conditions and acquiring fertiliser at affordable rates.
"The biggest challenge we are facing is unpredictable weather conditions. In 2018, we lost 40 hectares of our plantations because of a flood that was caused by Sebeya River,” Jonathan Nsengimana, one of the local farmers told this paper.
At the same time, he added, fertilizer is expensive.
Nsengimana is a financial manager of one of the largest farmer cooperatives in the Western Province.
Their cooperative is made up of more than 1,730 members, supplying more than 700 tonnes of tea per month to Pfunda tea factory.
According to Nsengimana, their cooperative supplied 7,138 tonnes last year with a target of supplying 8,000 tonnes this year.
"This is because we have expanded the size of land on which we grow tea and we think production will increase if the weather is favourable,” he noted.
Nsengimana said tea farming has helped those who practice it to grow and support their families.
"Most of the farmers easily access loans from SACCOs. They are able to take their children to school, feed their families, pay health insurance and do other activities,” he said.
Targets
Tea and coffee are Rwanda’s top foreign exchange earners and the two commodities are expected to dominantly drive Rwanda’s agriculture exports during the National Strategy for Transformation (NST1).
Under the same growth strategy, which runs from 2017 to 2024, the government targets to promote value addition as part of the efforts aimed at agricultural export growth.
Tea processing factories are expected to be increased in numbers and in capacity to 19 factories from the current 16.
Agro processing industries will be facilitated to access raw materials working with farmers and the private sector through improving the framework of contract farming and setting up of industrial blocs among others.
Growth of agricultural exports will be complemented by increasing the volume of traditional agriculture export crops and products.
Coffee productivity per tree will be increased from 2.8 kilos to 4 kilos, and tea productivity from 7 metric tonnes per hectare to 8 metric tonnes per hectare.
This will involve an expansion of the cultivated area, replacement of old trees and through increased fertilizer application from 7,000 metric tonnes to 9,000 metric tonnes per year.
Coffee planted will increase from 37,500 ha (2017) to 40,000 hectares a by 2024 while area planted with tea will increase from 26,879 ha (2017) to 32,800 ha by 2024 working with the private sector.