Four years of Kenyan tea reforms lift green-leaf payments and export earnings

Government interventions in Kenya's tea sector over the past four years have lifted green-leaf payments, raised export earnings and channelled new investment into smallholder factories, even as growers press for higher returns, according to businesstoday.co.ke.

The programme has focused on four objectives: reducing production costs, modernising tea factories, expanding markets and increasing the share of value generated by Kenyan tea that reaches farmers.

Subsidised fertiliser and factory upgrades

The central input measure has been subsidised fertiliser for smallholder growers. Since 2022, more than 650,000 tea farmers have received about 290,000 tonnes of subsidised fertiliser, easing a cost burden that has long defined the economics of smallholder tea.

On the processing side, the government has invested Sh850 million in modernising machinery and equipment at 17 smallholder tea factories, with the stated aim of improving efficiency and the quality of Kenyan tea.

Payments, output and export earnings

The Tea Board of Kenya says the interventions are beginning to translate into better returns at the farm gate. Average green-leaf payments rose from about Sh35 per kilogramme in 2021 to Sh64 in 2024, before settling at Sh56 in 2025.

Volumes and export receipts moved on separate tracks:

• Production increased from 537 million kilogrammes in 2021 to 598 million kilogrammes in 2024, then fell to 550 million kilogrammes in 2025.
• The value of tea exports rose from Sh136.5 billion in 2021 to Sh181.6 billion in 2024.
• Export value reached Sh186.9 billion in 2025, a further increase despite the drop in output.

The government is targeting average farmer payments of at least Sh100 per kilogramme by next year. Officials cite improved quality, lower production costs, increased value addition and more competitive selling channels as the drivers expected to deliver that target.

Value addition and market diversification

A second strand of the reform aims to cut the industry's reliance on bulk tea exports. VAT was removed on tea purchased from factories for value addition, and packaging materials for value-added tea were zero-rated. The government also provided a Sh100 million grant to Kenya Tea Packers (Ketepa) to establish a common-user facility for value addition, intended to support output of finished tea products.

Export destinations are being widened in parallel, with Kenyan tea promoted in traditional and emerging markets including Pakistan, Egypt, the United Arab Emirates, the United Kingdom, China, Saudi Arabia, Germany and Malaysia. The regulatory framework has changed as well, with the Tea (Registration and Licensing) Regulations and the Tea (Levy) Regulations introduced in 2026.

What farmers still want

At farm level the picture is mixed. In Baraton, Nandi County, seven-acre tea farmer Kennedy Kemboi says higher green-leaf prices have made it easier to cover some running costs, allowing him to pay farm workers and retain income for household needs; he is still waiting for subsidised fertiliser, which he expects will lower the cost of maintaining his farm. In Nyamache, Kisii County, farmer Teresa Moraa says tea remains her main source of income but argues that growers need stronger returns to meet household expenses, including school fees.

The next phase of reforms is expected to focus on strengthening factory governance, reducing production costs, expanding value addition and widening access to international markets. The sector's longstanding constraints remain in place: production costs, fluctuations in international tea prices, limited value addition and dependence on a relatively narrow range of export markets.

For hundreds of thousands of smallholders, the test will be the income received for every kilogramme of green leaf delivered to the factory rather than aggregate production and export figures. The Sh100 target is the next measurable benchmark for the programme.