Tea gardens in Rwanda
Guwahati, July 23: Luxmi Tea, which has 15 gardens in Assam and Tripura, will be the first Indian company to set up a green field project in Rwanda in Eastern Africa in the form of a tea factory.
The company signed an MoU with the government of Rwanda on July 12 for a green field project in Karongi district of the Western Province of Africa.
The project covers 438 hectares of an industrial block while 4,000 hectares will be a plantation for small tea growers.
A green field project is one that is built from scratch, without any pre-vious infrastructure.
The industrial block will be the captive plantation of the Luxmi Tea, along with the factory, to be operational by 2019-20.
The factory will be at Rugabano. The Rugabano Tea Company has been formed for the purpose.
Rugabano is around two hours' road travel from Kigali, the capital of Rwanda.
Captive plantations are raised in the lands belonging to the company, government departments, and educational institutions and in the large land-holding individuals on a revenue sharing basis or on a lease rental basis.
Apart from the 15 gardens in Assam and Tripura, Luxmi has three gardens in Bengal, including the iconic Makaibari.
The company exports Makaibari tea to Japan, UK, France, US, Dubai, Singapore and participates in auctions in the country.
The turnover from its tea business is Rs 200 crore while the group turnover is close to Rs 1,000 crore. The group is also in the real estate and carpets business.
On why the company was moving to Rwanda, a senior company official said Rwanda produced some of the finest teas in the world.
"The soil and weather are supportive of quality production. Rwanda is close to the Equator and the elevation of 2,000 metres ensures round-the-year plucking and low pest activity," the official said, adding that there was an availability of adequate manpower, which supported higher yields and a lower cost of production.
Tea is Rwanda's second largest export earner, generating close to $65million in annual revenues. Most tea processed in Rwanda is black tea. However, green tea and orthodox tea are also processed in small quantities.
The complete project will take about 13 years to 15 years to get implemented, including training for small tea growers. Rwanda produces around 25 million kg of tea and has 16 factories.
The small tea growers' plantation of 4,000 hectares will be planted with the support of East African Tea Investments (EATI) and the leaf from here will be sent to Luxmi factory.
"This venture is expected to yield 8 million kg of tea and will entail an investment of $28 million, of which Luxmi will spend $13 million. This will boost the Luxmi group production to 23 million kg," the official said.
The company has also signed a strategic partnership with EATI, a non-profit company established with funds from The Wood Foundation Africa (TWFA) and Gatsby Charitable Foundation (Gatsby) to support the development of the small tea growers.
Around 7,000 small tea growers will plant and harvest high quality green leaf for supply to the planned Luxmi factory at Rugabano.
The major tea-producing countries in Africa are Kenya, Uganda and Tanzania. The others are Malawi, Burundi, Mozambique and Rwanda. Tea production of Africa is around 650 million kg, of which 450 million kg is from Kenya alone.
The company said it is bullish about the venture and believes that this will add value both to their experience and Rwandan government's drive to promote agriculture exports.
"Teas from Rwanda garden will go to the Mombasa auction in Kenya to start with," the official said.
Another official of a tea company, which is doing tea business in Africa, said African markets are completely export-oriented.
A majority of African teas are produced for the export market because of very low internal consumption.
"It is good to see many Indian companies are now coming to Africa and even willing stay for the long haul," the official said.