The government has moved to sell Rutsiro Tea Estate to bolster the value and volume of tea exports after Rwanda suffered a drop in revenue receipts last year.

The 2014/17 Budget Framework Paper released by the Finance and Economic Planning Ministry attributes the drop in tea revenues, which dipped to 2.64 per cent in 2013, to the low prices on the global market.

The paper states that the revenues from tea can be stabilised through privatisation and by increasing the acreage of tea plantations.

The sale of the tea estate to Rwanda Mountain Tea, a firm already running five out of the 11 tea estates in the country, should turn around the performance of the estate by improving the quality of the tea; increase volume and also invest in value addition.

The 350 hectares tea block in Western Rwanda will be the tenth in a row, since the privatisation process started in 2004, with Sorwathe.

Tea revenues are expected to grow from $55.5 million earned last year to $67.7 million this year before settling at $71.5 million in 2015.

However, Rwanda Today could not establish how much the government had received from the sales and where the proceeds have been invested in as officials from both Rwanda Development Board and Ministry of Finance were cagey with that information.

The private sector has been attributed for the current gains in the tea industry, which have seen an increase in production from 5,414 tonnes in 1995 to 23,249 tonnes in 2010. The private sector has also been instrumental in introducing new types of tea at both the local and international markets.

For instance, Sorwathe, a leading tea firm in the country produces crush, tear and curl (CTC) type; orthodox type; black and green tea; organic tea; semi-fermented tea and specialty tea.

“Sorwathe produces around 3 million kgs of tea per annum and accounts for around 15 per cent of Rwanda’s production. It employs around 2,500 workers directly and purchases tea leaves from 4,500 small tea farmers,” said Rohith Peiris, director-general of Sorwathe.

Government officials say the country’s tea is competitive at the international market. A report on African Tea Brokers Ltd between June 30, and July 1, shows that Rwanda’s tea attracted the highest price. Each kilogramme was sold at $2.14. Kenya was ranked second in terms of price, its tea sold at $2.07 per kilogramme.

Rwanda’s tea fetches high prices because of its improved quality.

“The quality of black tea has improved tremendously making the tea competitive on the global market,” said Corneille Ntakirutimana, deputy director-general of support and chain development at National Agricultural Export Development Board (NAEB).

However, balancing investors’ interests — to remain profitable in a competitive tea industry — with those of farmers is proving to be a delicate task for the government. For a now the government has kept the farm gate price of tea low, in a bid to allow private investors to recoup their profits.

The government fixed the minimum farm gate price of tea at 30 per cent of the auction price hoping to gradually increase it by 50 per cent in fiscal year 2017/18 but that plan seems to have been shelved.

The move is causing jitters among tea farmers who think they are being exploited by processors and exporters.

The government defends its move by saying that “exporters and processors have to recoup their investments” after they complained that production costs in Rwanda are much higher than those of other East African countries. These costs are a result of high energy costs and the long distance from the nearest port.

Comparatively Rwanda’s farm gate price for tea is the lowest. Kenyans are paid 68 per cent more; Ugandans 50 per cent more; while Tanzanian farmers get 60 per cent more than Rwandan tea farmers.

“The price is low compared with other East African countries,” said Alfred Niyoyita, the president of the farmers’ co-operative at the International Tea Farmers’ Day at Nyabihu Tea Factory.