Kenya’s government has launched an ambitious overhaul of the tea sector, promising to raise farmers’ earnings to KSh100 per kilogramme of green leaf by 2027 and end years of unpredictable bonuses and regional inequalities.
Agriculture Cabinet Secretary Mutahi Kagwe unveiled the reforms in parliament on 3 December while answering lawmakers’ questions about shrinking payouts. “These reforms are meant to ensure fair, transparent and uniform earnings for all tea farmers across the country, regardless of region,” Kagwe told MPs.
The wide-ranging package includes tougher quality standards for green leaf, a new Tea Quality Laboratory in Mombasa, and a nationwide Strategic Tea Quality Improvement Programme. Factories will get access to a KSh3.7 billion concessional loan scheme to modernise equipment, while the reserve price at the Mombasa auction will be scrapped to encourage stronger bidding.
Authorities also plan to step up the fight against green-leaf theft and illegal hawking, audit underperforming factories, expand digital marketing platforms, deepen trade ties under the African Continental Free Trade Area, and enforce the new Tea Levy Regulations of 2024 to fund the sector sustainably.
One of the most immediate changes will affect cash flow: bonuses, currently paid once a year, will shift to quarterly disbursements. “Our goal is to ensure every tea farmer earns a dignified, predictable income,” Kagwe said. “These reforms are not cosmetic; they are structural.”
Background on Kenya tea industry challenges
Tea remains a lifeline for more than 600,000 small-scale farmers and one of Kenya’s top foreign-exchange earners. Yet the industry has been hit hard by a mix of internal inefficiencies and external shocks. In the 2024/25 financial year, average auction prices fell to USD2.41 per kilogramme of made tea from USD2.54 the previous year, largely because of currency shortages in Pakistan and Egypt, conflict in Sudan, and trade restrictions in Iran—markets that together take around 70% of Kenyan tea.
These global pressures have compounded longstanding issues at home. Farmers now receive a monthly base payment of just KSh23-25 per kilogramme, with the rest coming in an annual bonus that varies wildly based on auction results, exchange rates, and costs. Regional differences are stark: factories east of the Rift Valley averaged USD2.95 per kilogramme, delivering farmers around KSh69 per kilo of green leaf, while those west of the Rift managed only USD1.78 and KSh38. The national average stands at KSh56.
Production costs have also climbed, reaching KSh112.96 per kilogramme of made tea nationally and KSh134.34 in the west, driven by overstaffing and inefficiency. “Some factories are not operating optimally, and this directly hurts farmers’ returns,” Kagwe acknowledged. Oversupply in global markets has further depressed prices, and prolonged court cases have stalled previous reform efforts, leaving many growers in limbo.
Output has already dropped 11% in the first quarter of 2025, underscoring the urgency of reform. Kenya, as the world’s leading exporter of black tea, produced over 500 million kilogrammes last year, but smallholders—who account for 60% of production—have seen their incomes erode amid climate challenges like erratic rainfall and competition from lower-cost producers in India and Sri Lanka.
Details of the 10-point reform plan
Kagwe outlined a comprehensive 10-point plan to stabilize prices, enhance quality, and bolster governance. Beyond the quality lab and improvement programme, the reforms emphasize modernizing factories through the KSh3.7 billion loan facility offered at a concessional rate of 5% by the Kenya Development Corporation. This funding targets smallholder factories, enabling them to upgrade machinery and expand into higher-value products.
A key focus is shifting from traditional crush-tear-curl teas to orthodox varieties, which fetch premium prices in niche markets like Europe and the Middle East. “We have to modernize factories and address inefficiencies in various tea factories,” Kagwe said, stressing the need to reduce reliance on bulk exports vulnerable to oversupply.
Building on earlier initiatives from May 2025, the plan promotes value addition through common-user packaging facilities, tax incentives like removing excise duty on packaging materials, and VAT exemptions on exported value-added teas. Factories are encouraged to diversify into flavored, herbal, instant, and specialty teas, while embracing e-commerce for direct sales to international buyers. “By cutting out the middlemen, we ensure that farmers earn what they deserve. Price transparency is no longer optional; it is a necessity,” Kagwe noted in prior statements.
Sustainable practices are also prioritized, including transitions to renewable energy sources like biomass and solar to cut emissions, and investments in drought-resistant varieties to combat climate change. Youth engagement through innovation hubs and digital tools aims to rejuvenate an aging farmer base.
Stakeholder reactions and next steps
The announcement comes after months of complaints over low bonuses and falling global demand. Farmers’ representatives gave the plan a cautious welcome but stressed the need for quick action. “We have heard promises before,” said a grower from Kericho. “This time we need to see the money reach our pockets every quarter.”
The Kenya Tea Development Agency, which manages most smallholder factories, echoed calls for swift implementation, warning that without it, regional disparities could widen further. Opposition lawmakers in parliament questioned the feasibility of the KSh100 target, citing past delays from legal hurdles, but Kagwe warned against politicizing the issue. “Tea is extremely important,” he emphasized, urging unity to avoid destabilizing the sector.
Analysts say the reforms could transform Kenya’s tea value chain if executed well, potentially doubling exports to KSh300 billion annually by targeting premium segments. However, success hinges on overcoming court backlogs and securing buy-in from factories. Kagwe insisted the KSh100 target is realistic if quality and efficiency improve while the government delivers on commitments.
With tea sustaining livelihoods in rural heartlands like Kericho, Kisii, and Murang’a, these changes could ease household pressures and boost economic growth. As one farmer put it, “This is our brew—let’s make sure it pays fairly.”
