Reforming Tanzania's tea sector: a story of success?

An earlier version of this paper (which also contains an extensive discussion of the world tea market) has been published in the World Bank's Africa Working Paper series (Baffes, 2004a).

Figures & data

Figure 1: Production of made tea (tons). Source: Tanzania Smallholders Tea Development Agency

Table 1: Production of made tea by company (tons), 1996–2003

	1996	1997	1998	1999	2000	2001	2002	2003
Tea Authority^1	2 341	1 879	1 423	1 327	1 904	—	—	—
Kagera Tea Co.	—	—	—	—	—	382	234	447
Tanzania Tea Packers	—	—	—	—	—	1 012	5 114	5 597
Dhow Mercentile Ltd	—	—	—	—	—	241	538	528
Usambara Tea Growers Association	—	—	—	—	—	811	1 300	1 127
Brooke Bond	7 326	10 157	9 267	9 273	9 516	10 342	10 400	12 071
Mufindi Tea Company	3 044	4 151	4 871	4 153	3 610	4 101	4 283	4 743
East Usambaras Tea Company	2 649	2 159	3 964	3 613	3 606	3 244	3 693	3 532
Tanwat^2	645	856	1 457	2 305	2 565	3 004	—	—
George Williamson	1 967	2 584	2 746	2 237	1 875	1 686	1 285	647
Bombay Burma Co-Op	365	448	600	477	525	565	625	647
Ralli/Balangai Estates	1 421	818	549	241	168	121	123	90
TOTAL	19 768	23 051	24 876	23 626	23 769	25 509	27 564	29 457
^1Split into the Kagera Tea Co., Tanzania Tea Packers, Dhow Mercentile Ltd and Usambara Tea Growers Association.
^2As of 2002, ownership of Tanwat changed to Tanzania Tea Packers.
Source: Tea Board of Tanzania up to 2000 and FO Licht, World Tea Monthly (June 2004, p 258) the rest.

Table 2: Principal institutions involved in the Tanzanian tea sector

Institution	Entity	Main functions and responsibilities
Ministry of Agriculture and Food Security	Government	Supervises the sector. Acts as liaison between the sector and the legislature and provides legal and policy guidelines.
Tea Board of Tanzania	Statutory body	Created under the 1997 Tea Act and the subsequent tea regulations of 1999, it regulates the tea industry. Collects the 2.5 per cent cess for research and its own operating expenses. Issues production, import, blending, and packing licences. The private sector is represented on the Tea board.
Tanzania Smallholders Tea Development Agency	Statutory body	Created under the 1997 Tea Act and the subsequent tea regulations of 1999, it promotes the interests of the smallholders. Advises and makes recommendations to the Ministry of Agriculture and Food Security. Promotes and solicits financing for the five-year smallholders tea expansion programme. Supervises the privatisation and liquidation of the tea factories formerly owned by the Tea Authority.
Area Tea Growers Associations	Private sector	Established under the 1999 tea regulations, these associations are registered under company ordinance and promote smallholder interests by soliciting project finance from the five-year smallholders tea expansion programme. As of November 2001 there were associations in Usambara, Rungwe, Mufindi, Kagera, Lupembe.
Tea Association of Tanzania	Private sector	Established in 1943, it promotes the interests of the industry as well as influences legislative and policy decisions. Its membership consists of tea producers, packers and blenders. The Tanzania Smallholders Tea Development Agency is a member, representing smallholders. The Tea Association of Tanzania is a member of the East Africa Tea Trade Association.
Tea Research Institute of Tanzania	Private sector	Created in 1996 (commenced operations in 1998), it undertakes research on problems affecting the industry and develops technology to improve tea quality and production. It is a limited company with a 10-member board: estates (4), smallholders (2), government (2), growers (1), and the executive director. Its funding comes from the cess administered by the Board.
East Africa Stakeholders Tea Committee	Private sector	Addresses problems of the tea industry common to all East Africa tea producers, including intraregional trade issues.
East Africa Tea Trade Association	Private sector	Established in 1956, its objective is to promote the interests of tea trade in East Africa. It compiles and distributes tea price and trade statistics and facilitates the operations of the Mombasa Tea Auction. Its membership consists of 300 entities including tea producers, exporters, brokers, packers, and warehousers.
Mombasa Tea Auction	Private sector	Tea auction in Africa began in 1956 in Nairobi under the auspices of the East Africa Tea Trade Association. It moved to Mombasa in 1969. As of October 1992 transactions take place in US dollars. Currently, it is the world's leading tea auction, trading most of East Africa's tea, including Tanzania.
Source: Author's interviews; Ndunguru (2001); East Africa Tea Trade Association and Tanzania Smallholders Tea Development Agency.

Table 3: Prices at the Mombasa Tea Auction by origin, 1996–2004

	Tanzania	Kenya	Uganda	Malawi	Burundi	Rwanda	Average^1
US dollars per kilogram
1996	1.10	1.45	1.16	1.27	1.36	1.35	1.28
1997	1.70	2.03	1.80	1.63	—	1.96	1.82
1998	1.22	1.97	1.36	1.28	—	1.39	1.44
1999	1.18	1.86	1.29	1.06	1.65	1.52	1.43
2000	1.58	2.11	1.59	1.17	1.93	1.86	1.71
2001	1.22	1.62	1.12	1.06	1.27	1.47	1.29
2002	1.24	1.55	1.20	1.18	1.34	1.48	1.33
2003	1.25	1.62	1.25	1.14	1.43	1.56	1.38
2004	1.30	1.61	1.32	1.23	1.41	1.69	1.45
Tanzania's premium(+)/discount(−) (per cent) against other origins
1996	0	−24	−5	−13	−19	−19	−14
1997	0	−16	−6	+4	—	−13	−7
1998	0	−38	−10	−5	—	−12	−16
1999	0	−37	−9	+11	−28	−22	−17
2000	0	−25	−1	+35	−18	−15	−7
2001	0	−25	+9	+15	−4	−17	−6
2002	0	−20	+3	+5	−7	−16	−7
2003	0	−23	0	+10	−13	−20	−9
2004	0	−19	−2	+6	−8	−23	−9
Period average premium(+)/discount(−)
1996–99	0	−29	−7	−1	−24	−17	−13
2000–04	0	−22	+2	+14	−10	−18	−8
— not traded at the auction during that year.
^1Arithmetic average of the prices reported in the table.
Source: International Tea Committee.

Figure 2: Tea production and marketing structure in Tanzania. Notes: The numbers in parentheses are approximate production shares for the 1999/2000 season

Ndunguru , B J . Paper presented at the World Tea Convention . October 17–22 , Mombasa, Kenya. The tea industry in Tanzania ,

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