Kenyan tea farming is being weighed down by rising labour costs that could discourage investments and hurt the economy, the Kenya Tea Growers Association (KTGA) said on Wednesday.

The East African nation is the world's No. 1 exporter of black tea and the crop is its top foreign exchange earner. It earned 125.25 billion shillings ($1.24 billion) from tea exports last year.

KTGA said labour costs, which represent about half of the cost of production for its members, were set to rise in line with a labour court ruling earlier this month, increasing production costs by another 9 percent amid a decline in tea prices.

"Investment in the tea sector will reduce," it said.

The union representing tea pickers was not immediately available for comment.

The government is eliminating and cutting numerous taxes and levies on the industry to help Kenyan tea become more competitive in global markets.

($1 = 101.0500 Kenyan shillings)