Kenya's Tea Industry: The World's Largest Black Tea Exporter and the Fight for Fair Farmer Prices

Kenya is the world's largest exporter of black tea and the third-largest tea producer globally after China and India, with the industry generating approximately KES 186.9 billion (USD 1.44 billion) in export revenue in 2025. Tea has been Kenya's top foreign exchange earner for decades, supporting the livelihoods of over four million Kenyans across the value chain from smallholder farmers in the highlands to workers at the Mombasa Tea Auction, the world's largest black tea auction. Yet the industry faces significant challenges including declining auction prices, rising production costs, and regional disparities in farmer earnings that the government is addressing through sweeping reforms targeting KES 100 per kilogram of green leaf by 2027.

Production Overview

Kenya's tea production in the first seven months of 2025 totalled 322.29 million kilograms, an 11.5 percent decline from 364.13 million kilograms in the same period of 2024. The Tea Board of Kenya (TBK) projects total 2025 production at approximately 553 million kilograms, down from 594 million kilograms in 2024, with the slowdown attributed to poor rainfall patterns and the lingering effects of global trade disruptions on market demand.

Kenya's tea is grown predominantly in the highlands at elevations between 1,500 and 2,700 metres above sea level, where volcanic soils, consistent rainfall, and equatorial sunlight produce the bright, brisk flavour profile that distinguishes Kenyan black tea from other origins. The major tea-growing counties include Kericho, Bomet, Nandi, Kisii, Nyamira, Murang'a, Kiambu, Meru, Embu, and Nyeri. Tea production in Kenya occurs year-round, though the peak season falls between July and September when rainfall patterns favour optimum leaf growth.

Smallholder Farmers and KTDA

Smallholder farmers produce approximately 60 percent of Kenya's tea, organised into cooperatives under the Kenya Tea Development Agency (KTDA), the world's largest smallholder tea management agency. KTDA collects green tea leaves from over 600,000 registered smallholder farmers and processes them at 70 factories spread across Kenya's tea-growing regions. Each factory serves a defined catchment area, with farmers delivering freshly plucked green leaf to designated buying centres for transport to the factory.

The factory processes the green leaf through withering, rolling, fermentation (oxidation), drying, and sorting stages to produce the made tea that is then sold at the Mombasa auction. Farmers receive a monthly payment for their green leaf deliveries, with an annual bonus payment distributed after factory accounts are audited. The government is reviewing the bonus payment model to allow farmers to receive bonuses quarterly instead of annually, providing more consistent income throughout the year.

The Mombasa Tea Auction

The Mombasa Tea Auction, operated by the East Africa Tea Trade Association (EATTA), is the largest black tea auction in the world, handling teas from Kenya, Uganda, Tanzania, Rwanda, Burundi, and other regional producers. Auctions are conducted weekly, with buyers from over 50 countries bidding on catalogued lots through an electronic trading platform.

Average auction prices in the 2024/25 financial year declined to USD 2.41 per kilogram of made tea, down from USD 2.54, a drop attributed to forex shortages in Pakistan and Egypt, instability in Sudan, and trade-access challenges in Iran, markets that collectively absorb approximately 70 percent of Kenya's tea exports. Factories east of the Rift Valley achieved higher average prices of USD 2.95 per kilogram, while western Rift factories averaged USD 1.78, reflecting quality differentials driven by terroir and processing capabilities.

Export Markets

Kenya exported 652,792 tonnes of tea in 2025, a 4.35 percent increase year-on-year, though export revenue fell one percent to KES 186.9 billion due to weaker auction prices. Pakistan remains the largest buyer, importing 97.3 million kilograms in the first half of 2025, followed by Egypt with 37.2 million kilograms and the United Kingdom with 20.7 million kilograms. The United Arab Emirates, Russia, Sudan, and Hong Kong serve as other significant markets.

The heavy concentration of exports in a few markets, particularly Pakistan and Egypt, creates vulnerability to economic and political developments in those countries. Efforts to diversify into value-added products including flavoured teas, green tea, and ready-to-drink beverages aim to access premium markets in Europe, North America, and Asia where branded products command substantially higher margins than bulk commodity tea.

Government Reforms

The government has unveiled comprehensive tea sector reforms targeting farmer earnings of KES 100 per kilogram of green leaf by 2027, nearly double the current national average of KES 56. Key reform initiatives include a KES 2 billion fertiliser subsidy to reduce production costs, a KES 3.7 billion concessional loan facility for factory modernisation, the abolition of the reserve price to stimulate market demand, and intensified efforts to curb green leaf hawking and theft that deprive registered factories of raw material.

Quality-based reforms are central to the strategy, with the introduction of blind tasting, scientific ranking of teas, and enhanced training for tea makers at the factory level. The government plans to establish a national Tea Quality Assurance Laboratory in Mombasa to provide independent testing, grading, and certification services for Kenyan teas destined for export markets. These quality improvements aim to shift Kenyan tea from commodity pricing toward premium positioning that rewards excellence in processing.

Challenges and Future Outlook

Rising production costs represent the most pressing challenge for smallholder farmers. Average production costs have reached KES 112.96 per kilogram of made tea, with western Rift factories facing even higher costs of KES 134.34. When combined with declining auction prices, many farmers earn less than the cost of production, threatening the economic viability of smallholder tea farming. Climate change is disrupting traditional rainfall patterns, with prolonged dry spells reducing yields and increasing irrigation costs.

Regional earnings disparities remain stark: farmers in the east earned an average of KES 69 per kilogram of green leaf compared to just KES 38 in the west, reflecting differences in tea quality, factory efficiency, and auction performance. The KTDA management structure has faced criticism over governance issues, with reform proposals including enhanced transparency, competitive management selection, and greater farmer representation in decision-making. Despite these challenges, Kenya's tea industry remains a cornerstone of the national economy, and the combination of government reforms, quality improvements, and market diversification efforts positions the sector for a more sustainable and equitable future.