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SGR Has Boosted Direct Tea Sales to Sh600mn-KTDA

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A number of KTDA tea buyers and packers using the direct sales channel have embraced the usage of the Standard Gauge Railway (SGR) as it enhances logistical efficiencies and savings from the use of the railway to transport tea.

Nine tea factories managed by the Kenya Tea Development Agency (KTDA) have transported tea for export worth more than Ksh600 million using the Standard Gauge Railway (SGR) since May 2019.

The factories, Mungania, Ngere, Momul, Gacharage, Kapkoros, Makomboki, Motigo, Imenti and Kionyo, have used the SGR to transport over two million kilograms of tea to the market in a process known as ex-factory containerization.

Unlike the process where tea is taken to the auction in Mombasa, through Direct Sales,(DS) tea is processed, stuffed into containers for export at source (factory) and transported to the port of Mombasa without going to the warehouse, in a process referred to as ‘ex-factory containerization’.

From the factories, the containers are ferried by road to the Nairobi Inland Container Depot (ICD) in Embakasi, where they are railed to the port using the Standard Gauge Railway (SGR) for export. 

This process has led to enhanced efficiencies in the transportation of made tea to the market, with factories receiving payments much earlier for teas transported through this mode, compared to when tea is transported by road to Mombasa and sold normally after storage.

KTDA Management Services Managing Director, Alfred Njagi says ex-factory containerization continues to be an increasingly preferable option for big packers that have direct sales arrangements with factories.

“Over and above being a more efficient method of transporting tea by cutting down on delays occasioned by road transport and warehousing, it has added advantages in that tea factories do not incur auction expenses such as warehouse storage and brokerage costs,” said Mr. Njagi.

“It presents an opportunity for factories to leverage the SGR framework to reduce costs; while getting payments processed faster for their sales. For the customers, this process ensures quality of product is maintained due to the shorter time it takes to reach them and also guarantees product safety due to lower multi handling of the tea,” he added.

There are prospects for increased engagement through the process, said Njagi, which includes the construction of KTDA Warehouses next to Nairobi ICD; the re-negotiation of transportation fees on railed goods to Mombasa and, with the Lamu Port development, offer greater access to Sudan and Ethiopian tea markets.

The extension of the SGR line to Naivasha will make it more feasible for tea factories in the Rift Valley and Western Kenya to explore this process.

Currently, the containerization project is being undertaken jointly between the nine factories and Taylors of Harrogate, a leading packer based in Yorkshire, UK, with whom the factories have a direct sales arrangement.

So far, 92 units of 40ft containers have been successfully containerized at the factory and transported by SGR to the port for export.

See Also>>>>> Questions Raised as KTDA Postpones AGMs

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BT Reporter
BT Reporterhttp://www.businesstoday.co.ke
editor [at] businesstoday.co.ke
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