More than 18,000 hectares of tea bushes are in advance stages of development as the country moves to bolster tea production for export.

The move comes when both the unit price and volume of tea is dropping, largely on falling global prices while locally the factories in the country are operating below their installed capacities.

Some of the processors said that there is a supply gap of green tea leaves from outgrowers who have chosen to grow food crops. This has negatively affected the supply of green leaf.

But the uncertainty in global tea prices is also affecting the processors and exporter’s revenues.

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Last year, the tea receipts declined by 16 per cent fetching $55.5 million compared with $65.7 million in 2012.

To mitigate the supply shocks, Tony Nsanganira, State Minister for Agriculture said acreage of tea plantations and use of more fertilisers will be increased.

 “We have invited investors to develop 10,000 hectares of land while the government is to develop the remaining 8,000 hectares,” said Mr Nsanganira.

The government also plans to privatise its tea plantations at a later stage. Over the past 10 years, the government has sold its controlling shares in 11 of its plantations and factories for Rwf19 billion according to the Rwanda Development Board.

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Cabinet approved the sale of Rutsiro Tea Estate to Rwanda Mountain, two years after Gisovu Tea Factory was bought by Borelli Holdings.

The government also sold a 90 per cent stake in Kitabi Tea Factory to Rwanda Mountain tea in 2009. The following year, Gisakura and Mata tea factories were sold to a single investor, TGI — who bought a 60 per cent stake.

More fertilisers will be used in tea plantations to boost their productivity.

“Its not only about expanding plantations but also maximising productivity and this is the responsibility of farmers. However there has to be collaboration between farmers and processors,” said Mr Nsanganira.

“Finding available land for the expansion of tea plantations remains a challenge but this is being addressed by increasing the yield per hectare through the use of modern agricultural practices,” read a statement from the Rwanda Development Board.

However, the supply gap cannot be addressed in the short-term meaning that some factories will continue to operate below their installed production capacity as it takes three years for tea bushes to mature.

The dry spell which set in May this year has also taken a toll on tea production.

But the Rwandan outgrower is protected from the supply shocks as the farm gate prices are dictated by the auction market. In Rwanda the local tea farmer is paid a minimum of 30 per cent of the auction price.

Statistics from the Rwanda Development Board show that green leaf prices have been increasing over the years from Rwf45 10 years ago to Rwf137.2 — a 205 per cent increase.

The government still has significant shares in several factories including Gisakura where it has a 15 per cent stake; in Mata 30 per cent; Gisovu 30 per cent and in Shagasha 10 per cent.