Tea Processing and Export in Kenya: A Legal Guide for Investors

Kenya is the world’s leading exporter of black tea and one of its top agricultural foreign exchange earners, but the legal framework behind the crop has changed twice in the last decade. An investor setting up a tea factory or export business in Kenya needs to know the Crops Act 2013, the Tea Act 2020 and its licensing regulations, and the practical rules of the Mombasa Tea Auction, because getting the licensing authority wrong (as many outdated guides still do) can stall a project before it starts. This guide sets out the current law and institutions governing tea processing, factory licensing and export in Kenya, and the reforms investors should factor into 2026 planning.

The regulator: Tea Board of Kenya, not the AFA Tea Directorate

Many secondary sources still describe Kenya’s tea regulator as the “AFA Tea Directorate”, and for a period that was correct. The Crops Act, 2013 (Act No. 16 of 2013) abolished the old commodity boards, including the original Tea Board of Kenya (established in 1950 under the Tea Act, Cap 343), and folded their functions into a single Agriculture and Food Authority (AFA), with tea handled by an internal Tea Directorate. Section 18 of the Crops Act sets the rule that still applies across scheduled crops generally: a person “shall not manufacture or process a scheduled crop product for sale except under and in accordance with a licence issued under this Act,” with the Authority or county government as the case may be acting as licensing authority.

That arrangement did not last for tea. Parliament enacted the Tea Act, 2020 (Act No. 23 of 2020), which came into force on 11 January 2021 and re-established a standalone Tea Board of Kenya as “a body corporate to develop, promote and regulate the tea industry” under section 3, separate from AFA. The Board is now a State corporation under the Ministry of Agriculture and Livestock Development, governed by a Cabinet Secretary-appointed board and run day to day by a Chief Executive Officer. AFA’s own published mandate and directorate structure no longer includes tea, confirming the AFA Tea Directorate model has been superseded. Investors should treat the Tea Board of Kenya, not AFA, as the primary tea regulator, while noting that the Crops Act 2013 still supplies the general scheduled-crop licensing architecture the Tea Act operates alongside.

Under section 5 of the Tea Act, the Board’s functions include developing and regulating the industry, licensing manufacturers, registering brokers, management agents, auction organisers, warehouse operators, buyers, exporters, importers and transporters, approving intermediaries’ fees and commissions, and suspending or revoking licences for non-compliance. Section 45 gives the Board a specific power to approve any fee or commission charged by a broker, management agent or auction organiser, which matters for anyone structuring a brokerage or marketing arrangement around a new factory.

Licensing a tea factory: manufacturers, growers and dealers

Section 25 of the Tea Act, 2020 requires a manufacturing licence from the Tea Board before any person may manufacture tea for sale, and section 26 obliges the Board to keep a public register of licensed manufacturers. Sections 40 to 42 govern licence conditions, renewal and the grounds for variation, suspension or revocation. The Crops (Tea Industry) Regulations, 2020 (Legal Notice No. 97 of 2020) add more granular categories that still shape how the sector is organised: a “tea factory limited company” sources green leaf from its own estate and from registered growers, while a “cottage tea factory” is a smaller operation manufacturing between 38,500 and 400,000 kilograms of made tea a year. Growers are registered as smallholder tea growers (no own processing) or plantation tea growers (with their own facilities).

The chain of intermediaries around the factory is separately licensed. The Tea Act requires registration of tea buyers, exporters and importers (section 30), warehouse operators (section 28) and tea brokers (section 32), while the 2020 regulations add registration for tea packers and monthly reporting obligations for several dealer categories. An investor should map out early which of these categories its business model falls into, since a green-leaf processor selling only through a broker has a materially different registration profile from a vertically integrated grower-processor-exporter. A new factory also needs the general licensing regime applicable to any Kenyan manufacturing enterprise (company incorporation, a KRA PIN, county business permits and NEMA environmental approvals), on top of the Tea Board’s manufacturing licence, and county-level agricultural rules can apply in devolved tea-growing areas.

Selling the tea: the Mombasa Tea Auction versus direct sales

Most Kenyan tea, and a large share of tea from Uganda, Tanzania, Rwanda, Burundi and other regional producers, is sold through the Mombasa Tea Auction, run by the East African Tea Trade Association (EATTA), a self-regulating trade body that has operated the auction since the 1950s. Sales run through weekly auctions (secondary grades on Mondays, main grades on Tuesdays) conducted through licensed brokers, alongside broker-facilitated private treaty sales. EATTA describes itself as working closely with the Tea Board of Kenya, which it calls the apex regulatory body for the industry, and a Kenyan applicant for EATTA membership must hold a Tea Board registration certificate before its application is considered. Members fall into categories including producers, brokers, buyers, packers, public and private warehouses, associates and management agents, each with its own admission criteria, and a new applicant must be sponsored by an existing member of at least three years’ standing.

Direct sales outside the auction are lawful and increasingly used by smallholder-linked factories and independent estates alike, particularly for specialty and orthodox teas sold on long-term contracts. The Tea Act, 2020 fixes no mandatory percentage between auction and direct-sale channels, so the split is a commercial decision, subject to the buyer’s or exporter’s own registration requirements. What has changed is auction pricing itself: EATTA had operated a minimum reserve price of USD 2.34 per kilogram since 2021 to protect farmer incomes, but in October 2024, after stakeholder consultations, it abolished the reserve price and returned to market-determined pricing. The stated reason was that the floor price was making Kenyan tea less competitive, causing unsold stock to build up as buyers avoided the auction; the move aimed to restore export volumes, though it removes a price floor investors may previously have relied on when modelling factory-gate returns.

KTDA-managed smallholder factories versus independent and multinational estates

Kenya’s tea processing sector splits between two ownership models, and an investor’s entry route depends heavily on which one it is joining. The Kenya Tea Development Agency (KTDA) is a private limited company, established in 2000, acting as management agent for 54 farmer-owned tea factory companies (which, with satellite factories, run around 69 factories in total). Each factory company is owned by the smallholder growers who supply it, and those growers are in turn the ultimate shareholders of KTDA Holdings Limited; KTDA Management Services Ltd is contracted by each factory company to manage cultivation support, green leaf collection, processing and farmer payments. Around 600,000 smallholder farmers are linked to the KTDA system, and KTDA-affiliated factories account for a majority of Kenya’s made tea output. An investor cannot simply acquire a KTDA factory as it would an ordinary company, because ownership is tied to grower shareholding in the relevant factory company; commercial engagement with the KTDA sector typically comes through supply, service or partnership arrangements with individual factory companies or with KTDA Management Services, rather than direct equity acquisition.

By contrast, independently owned estates, including long-established multinational plantation businesses, own their land, grow their own tea and operate wholly owned processing factories integrated with their estates, without KTDA’s cooperative structure. These are ordinary Kenyan companies, often subsidiaries of foreign parent groups, and are the more conventional entry point for a foreign investor: land or an existing estate can be acquired or leased, a factory built or bought outright, and the resulting business licensed with the Tea Board like any other manufacturer. Because Kenya restricts non-citizen freehold land ownership under the Land Act and the Constitution, a foreign investor acquiring estate land will generally need to structure the acquisition around leasehold tenure.

Export licensing and compliance: KEBS, KEPHIS and KEPROBA

Exporting made tea sits on top of the manufacturing and sales licensing already described. An exporter must register with the Tea Board under section 30 of the Tea Act as a tea buyer, exporter or importer, in addition to general trade formalities: incorporation and registration on the government’s eCitizen platform, a Kenya Revenue Authority (KRA) PIN, and standard KRA export documentation. Because tea is a plant product, consignments require a phytosanitary certificate from the Kenya Plant Health Inspectorate Service (KEPHIS) confirming freedom from regulated pests and diseases before export. The Kenya Bureau of Standards (KEBS) maintains Kenya Standards for tea quality, including a specification for black tea, and issues standardisation marks and certifications that many overseas buyers and destination-market regulators expect before accepting a shipment, so exporters should confirm current KEBS requirements for their specific markets before a first shipment.

On the promotional side, the Kenya Export Promotion and Branding Agency (KEPROBA), the state agency that succeeded the former Export Promotion Council after a 2021 merger with Brand Kenya, provides trade advisory services, buyer-seller matchmaking and market intelligence for exporters, including in tea, from its Nairobi offices. KEPROBA is not a licensing gatekeeper the way the Tea Board or KEPHIS are, but it is a useful first point of contact for market-entry support, particularly into new or non-traditional markets, alongside the mandatory regulatory steps.