(Ecofin Agency) - In Kenya, tea production is hampered by rising labor costs. While the world’s number 1 black tea grower generated Sh125.25 billion ($1.25bn) in exports last year, this year it could see tea earnings slide.

According to data released by the Kenya Tea Growers Association (KTGA), the increase in labor costs, which constitute half of the production cost, could discourage investment in the sector. Labor costs which were set to rise in line with a labor court ruling earlier this month could drive production costs up 9% amid falling tea prices. Concerned about the situation, Kenyan farmers recently said in statement relayed by the “Daily Nation” that “such wage increases clearly jeopardise the tea industry’s future sustainability”.

The government on its side, is trying to cut farmers’ charges as much as possible by suppressinb and reducing taxes and duties in the tea industry.