ADIS ABABA (Commodity Online) : Just day’s after Kenya announced more plans to boost tea output, neighboring Ethiopia said it will also work out strategies to boost its production.

Ethiopia, which shares its southern border with Kenya currently produces about seven million kilogram’s of tea from three privately run estates.

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Ethiopia's production capacity is smaller compared to Kenya but its leaf quality is causing concerns that the country could soon launch a formidable challenge to Kenya's tea exports, including in the blending segment, analysts said.

Country’s Agriculture and Rural Development ministry projects output could swell substantively in the coming years now that it had identified some 50,000 hectares of land suitable for production of the beverage.

Tea Board of Kenya said, many countries in the region are looking up to expanding their tea industries, but our immediate attention would be on Ethiopia because we share almost similar types of soil and climate and the quality of their tea is largely similar with ours.

While Ethiopia has emerged a success story in Coffee business, its tea industry has over the decades faltered largely due to lack of investment and the lengthy periods of time that lapsed before such investors could recoup their money.

The initial investment in tea is huge and most investors get discouraged by the fact that it takes a minimum three years for the bushes to mature before any harvests could be done and leaf sold to realise any returns.

In April last year an Ethiopian firm signed a $300 million joint venture deal with a Dubai-based firm to develop a 5,000 hectare tea plantation in Illubabor area.

According to the pact East Africa Agri-business and Dubai World Trading Company planned to produce close to 423,000kg of black tea by 2012.

The Food and Agriculture Organisation (FAO) in December predicted that the global tea market would witness some shake-up in terms of supply and demand as producing countries rush in to expand areas under the crop in a bid to cash-in on the record high prices witnessed over 2009.

The indicative world price for black tea reached a high of $3.18 a kg in September 2009, compared to an average price of $2.38 per kg in 2008.

The historic rally in global prices of tea was caused by droughts in India, Sri Lanka and Kenya against increased demand for the product.

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