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Kenyan Government Aids for New Plant

Kenya - The Kenyan Government is helping the Kenya Planters Cooperative Union (KPCU) establish a new plant to add value to Kenyan coffee, said cooperative development and marketing minister Peter Njeru Ndwiga in a news article that appeared in The Nation (Nairobi).

Coffee, he said, was exported raw, roasted and packed abroad, and then resold to the country at triple the price of unprocessed beans. As a result, Kenyan coffee farmers are earning far less than they should. Ndwiga denied claims that the Government planned to allow exporters to buy coffee directly from farmers.

“The Government’s proposal to introduce a system in which the crop will be sold directly to buyers alongside the traditional auction system does not mean freedom to buy directly from farmers,” he said. Instead, sales would be done through licensed marketing agents.

Bulk Sales Bad for Kenya Tea, Warns Report

Kenya - As reported by The Nation (Nairobi), Kenya risks losing its export market share if it continues to sell tea in bulk, according to a new study done by the Kenya Industrial Research and Development Institute (KIRDI).

“Bulk packaging is a major hindrance to earning in the sector, and it only creates employment in other countries where packaging is done,” the report says. It concludes that although Kenya produces some of the best-quality tea in the world, the growers’ earnings have not improved.

The study finds that current laws are to blame, saying that they hinder value-adding manufacturing. “There is very little value addition in the country, and a majority of Kenyan consumers are not even aware that they consume what is grown and processed by them,” it says.

The Opportunity Study on Investment in Packaging of Kenyan Tea report also wants Kenyan tea to have an identity through branding. “A logo whose usage is only restricted to those packaging Kenyan tea could be introduced,” the study suggests. The study, which covers production, processing and consumption, underscores the need for pesticide-free tea in line with the ISO standards: “This is necessary because our packers end up being scrutinized more by any prospective importer to ascertain the quality of the tea.” The lack of ISO standards, it says, could be exploited by foreign companies who blend Kenyan tea with other cheap brands before resale.

To solve the problem, the study calls for a reduction in taxes on packaging machinery.

“The Government should consider tea a raw material so that machinery imports and other inputs may attract low duties like in the other agricultural sectors,” said Dr. Felix Muhindi of KIRDI at the launch.

Tata to Open Coffee Plant in Uganda

India - TATA Coffee is set to open a coffee processing plant in Uganda, The Monitor (Kampala) reported.

The Uganda Investment Authority (UIA) has suggested Jinja as a potential site for the factory, although a location has yet to be confirmed. The factory is expected to be functioning within the next two years. It will likely also process coffee grown by Ibero Uganda Limited, a supplier of quality Uganda coffees.

The government will subsidize the cost of power and will provide the land that the factory will be located on.

Tata’s managing director, M. H. Ashrafa said that the company will work closely with the Ugandan government to ensure that their citizens benefit from the business. According to investment minister professor, Semakula Kiwanuka, the factory would add value to coffee in Uganda and will ultimately increase foreign exchange. He added that Ugandans have been “donating” coffee to other countries in the process of exporting the product in a raw material form, the practice has subjected Uganda coffee to low prices.

“The government’s vision has been to export processed coffee. When a farmer sells a kilo of unprocessed coffee, he will earn an average of $1, but a processed kilo of coffee can earn him about $15,” Kiwanuka concluded.

Hailstorm Destroy 561 Hectares Under Tea

Kenya - The East African Standard (Nairobi) has reported that a severe hailstorm has destroyed 561 hectares under tea, forcing the management of two tea companies in Kericho to send some 932 tea pickers on paid leave.

Kericho-based Kaisugu Tea Limited has sent 800 workers on leave since the storm. The rains destroyed 321 hectares under tea at the company. Kaisugu Tea general manager, Charles Kipng’ok said the company had incurred a major loss of more than Sh8 million as a result of the hailstorm. He also noted that the factory is now operating under capacity and hoped that normalcy would soon return.

Before the hailstorm struck, the company harvested an average of 20,000 kilograms of green leaf per day. The management has also decided to send home tea pickers on paid leave to cut on costs.

Coffee Bean & Tea Leaf opens regional training center

Dubai, U.A.E. - AMEinfo.com reported that Coffee Bean & Tea Leaf has opened a regional training center in Dubai’s Al Quoz industrial area. The 2,000 square foot facility will cater to the operational and training needs of the entire Middle East region. The regional center is also the UAE’s distribution hub, with a 20-strong team ensuring supplies to the chain’s nine outlets across the emirates.
Tata Tea plans to expand in US

India - India’s number two tea maker Tata Tea is on the acquisition trail in the U.S., where it plans to gain a greater share of the specialty tea market, AP Food Technology reports.

The company has a significant presence in more than 35 countries after buying the worldwide tea business of U.K.-based tea major Tetley Tea five years ago.

It is now aggressively looking for acquisition opportunities in the U.S. and has said it is in talks with a number of potential takeover targets.

“We have initiated dialogues with a number of prospective companies. However, talks are still in the discussion stage and nothing specific or concrete has materialized at this point and it would be premature to comment on timeframe,” Tata Tea managing director P T Siganporia said in a statement.

However Indian press reports said the group is close to buying two mega-tea brands in the U.S., which could cost around $100 million each.

The company is looking to strengthen the specialty and herbal tea segments which are growing very fast. In the last three years it has grown by 50% in the U.K. and 8% in U.S., double the growth in regular tea.

Starbucks tackles health insurance issues

United States - The Associated Press has reported that Starbucks will spend more on health insurance for its employees this year than on raw materials needed to brew its coffee, chairman Howard Schultz said as he decried a health-care crisis that soon could overwhelm U.S. businesses.

Schultz, whose Seattle company provides health-care coverage to employees who work at least 20 hours a week, said Starbucks has faced double-digit increases in insurance costs each of the last four years.

“It’s completely nonsustainable,” he said, even for companies such as his that “want to do the right thing.”

Schultz made the comments yesterday at a meeting with Sen. Patty Murray and Rep. Adam Smith. The event was one of several organized by Schultz and other executives to call attention to what they called a growing health-care crisis.

“I would hope congressional leaders put this at the front of their agenda,” Schultz said.

The company expects to spend about $200 million this year for health care for its 80,000 U.S. employees - more than the total amount it spends on green coffee from Africa, Indonesia and other countries.

Tea & Coffee - October/November, 2005
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