OCIR-Thé to invest Rwf 27b in the tea industry

Rwanda Tea Authority (Ocir-Thé) will invest $49m (Rwf27.8b) in the tea sector for a period of four years in order to realize its tea export and production targets. The public parastatal charged with overseeing the production and marketing of tea in the country is targeting $70m (Rwf39.8b) from tea exports in 2012 and at the same time seeks to double average profitability for tea farmers. Last year tea generated $45m (Rwf26.6b) in export receipts. Rwanda’s latest Tea Strategy shows that with the said investment, the country can also meet its production targets. However, Ocir-Thé’s budget for 2008-2010 will address almost $30m (Rwf17b), representing 75 percent of the total funds required. This means that there is need to locate approximately $19m (Rwf10b) in investments from other sources. The tea agency says that a fraction of $2m will be spent on marketing. Official say that this figure will need upward adjustments but it is not yet known whether this will induce a budget increment. On The Frontier (OTF) group says that for the agency to meet its target, key challenges like high fertilizer costs, high transport costs and expensive power in the tea industry must be addressed. The American consulting firm working in Rwanda says that fertilizer costs in Rwanda are 50 percent more than Kenya’s while Rwanda’s electricity cost of $0.20 (Rwf114) per KWh is higher than Uganda’s which is approximately $0.10 (Rwf57) per KWh. The firm said that even the applied fertilizers are not specific to soil needs. “Growers trade off quantity ahead of quality due to limited enforcement of green leaf quality requirements,” James Foster, OTF Manager said in a presentation during a bidders conference for the sell of Gisakura and Kitabi tea factories. Rwanda is selling off part of her stake in lucrative tea factories and plantations of Gisakura and Kitabi.OTF says that the poor quality of roads and overloading of trucks by cooperatives reduces quality whereas limited investments in public factories lead to overuse of factory lines which reduces quality. Rwanda over-depends on the Mombassa auction market for her tea sales with majority of CTC and extremely small quantities of packaged teas sold on the local market. “One government and three private factories are developing plans to enter into Orthodox teas, which fetch a premium of up to 75 percent over CTC teas, as well as bringing in equipment that can also handle other specialty teas, such as green tea,” the national tea strategy says. The tea industry is one of the top foreign exchange earners providing an income for more than 60,000 families. Ends

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OCIR-Thé to invest Rwf 27b in the tea industry