Over 560,000 smallholder tea farmers in the country are set to earn Sh50.01 per kilo of green leaf, up from Sh48.40 last year, in the highest payment to small scale tea farmers in the world. The rise, according to the Tea Development Agency, has been driven by improved tea production and higher tea prices in the global market.
KTDA's total payment to smallholders will rise by 12 per cent, from Sh40.5bn last year to Sh45.31bn this year. The payment includes an announced bonus of Sh37.51 per kilo, up 3 per cent from last year’s Sh36.40 bonus.
The tea authority's payment is at least Sh7 higher than the second best paying company, Eastern Produce, which is this year paying farmers Sh43.20 per kilo of green leaf, while Finlays is paying its farmers Sh41.20 per kilo, and Maramba tea factory Sh37 per kilo.
Technology has delivered a sharp lift to returns for the more than 400,000 small-scale tea farmers who sell their tea to the Kenya Tea Development Authority with the roll out of automated weighing scales in all KTDA tea buying centers in the country, removing the backlogs in records, long queues on delivery and heavy overheads of the former manual system.
The introduction of the new data system comes as part of ongoing reforms within the tea agency to cut production costs and improve the earnings of small scale farmers, and follows the souring relationship between tea directors and farmers on accusations by farmers that directors were collaborating to steal from them. Last year, some farmers in Othaya, Muthithi, Kirinyaga and and Murang'a in central Kenya even uprooted their tea bushes citing the low returns.
However, the new data system is now lifting farmers’ margins in several ways, says the agency.
Previously, manual weighing machines required some eight clerks in buying centers to carry out the record keeping, which was at times cumbersome and often saw records lost in the high volume of paper work. The electronic weighing solutions, as the technology is known, has converted 40 days work into 1 day’s work for one clerk.
For the farmers previously expected to foot the bill for the weighing clerks, this has delivered a significant drop in overheads. “The good thing with this technology is that even drivers who have not enjoyed formal schooling can operate it easily. We have around 30 drivers who are operating the EWS and they have never had a problem with it.
You can imagine in a tea buying centre that had 8 clerks, all of them replaced by the machine and the driver knowing how to operate it. This is one of the best things that have ever happened to farmers,” says Mr. Fred Gori Corporate affairs manager at KTDA.
The biggest change, however, is in the accuracy of the records. While the manual machines only recorded the whole figure and omitted the figure after the decimal, the EWS records the precise weight, restoring to farmers substantial losses that were being incurred.
“I will admit the number of cumulative kilos the farmers lost were astronomical. We never took kilos with decimal points, so if a farmer’s tea leaves weigh 30.90 kilos, it was assumed they were 30 kilos, so you can imagine how much they eventually lost,” said Francis Gatonye, a clerk at Githambo Tea buying centre in Central Kenya,
The technology assures accuracy of data captured and saves on time and human resource by having data captured at source, but it also makes automated reconciliations between factory weights and buying centre weights, ensuring tea is not lost along the chain.
“The solution allows for data retrieval and provides reliable backup thereby assuring integrity of green leaf information,” said KTDA’s Finance and Strategy Director, Benson Ngari.
It has also provided a data system that means management can handle grower issues at the buying centre level, including registration, loans management, payments and fertilizer queries.
The technology ensures that only valid growers can deliver green leaf at buying centers. Growers’ information is stored on the PDA and is loaded every morning to ensure that newly registered or transferred growers are included.
Upon delivery of green leaf, the PDA automatically captures the weight into its memory and sends a print-out to the printer. At the end of the day, the weights are downloaded automatically from the PDA to the server at the factory without manual intervention.
The technology consists of a weigh scale, a personal digital assistant (PDA) and portable printer, with rechargeable batteries that can operate for at least 24 hours on continuous weighing without power supply, and server software.
This set-up has ensured that deliveries can carry on through any power cuts. In addition, the PDA has sufficient memory to store data for at least one year.
The East Africa Tea Trade Association (EATTA) has set about reshaping energy use by the regional tea industry, in a bid to slice away almost 10 per cent of current EA tea prices through realising saved electricity costs. The change holds the potential to transform the global competitiveness of East African tea.
Driven by the region's high electricity costs, the Greening Tea Industry in East Africa (GTIEA) programme is establishing six small hydro power demonstration projects in at least four of the EATTA member countries, Kenya included. The studies and planned small hydropower installations will serve as training grounds for the tea sector, said GTIEA in a recent report.
The Global Environmental Facility is funding the project, which is being co-implemented by the United Nations Environmental Programme and African Development Bank. “The GTIEA project is in the final year of operation and one small hydro power project is already running. The other projects are in study phases while some are in the stage of preparation for implementation,” said the report.
Tea production costs account for 60 per cent of the tea prices realised at the Mombasa tea auctions, 30 per cent of which are energy costs. It is estimated that reverting to hydro energy would reduce energy costs to 12 per cent thereby improving the producers' profit margin substantially.
Mombasa is now the largest tea auction in the world and auctions tea from Kenya, Uganda, Burundi, Tanzania and Rwanda. Other countries include Mozambique, Madagascar, Malawi and Democratic Republic of Congo.
In Kenya, the new energy initiative is supporting Kenya Tea Development Agency's Gura river small hydro project in Nyeri county and a 3 megawatt project on Kipchoria river in Nandi county being developed by Eastern Produce Kenya, a company owning seven tea factories in Kenya and ten in Malawi.
It has been estimated that Kenyan electricity is among the most expensive in the world. This places the country, and its tea sector, at a distinct cost disadvantage compared to its international competitors, primarily Sri Lanka. Yet the tea industry supports some 10 per cent of the Kenyan population.
Small hydropower is therefore seen as a way to reduce the dependence of tea companies on fossil-fired diesel generating sets and on costly and, at times, unreliable grid-supplied electricity.
While the tea sector has not traditionally generated electricity, it is a large consumer of the costly commodity. In many cases, tea companies erect standby diesel generating sets to ensure availability of electricity to run the processes involved in tea production.
The project aims to reduce greenhouse gas emissions – a goal of GEF and UNEP – through increased investments in the development and installation of small hydropower facilities in tea areas where hydro potential is abundant.
Aside from the projected reduced production costs for tea companies and factories, the reliability and efficiency of operations of small hydropower systems are seen to further benefit the tea sector and the communities at large.
For example, the small hydropower projects will contribute toward the electrification of the communities surrounding the tea estates. This contribution to the region is vital, where as much as 90 per cent of the population in some areas have no access to electricity.
In addition, when a tea factory or company develops its small hydropower resource, the expensive-to-operate diesel generating sets can be put on standby. This will further reduce costs and minimize greenhouse gas emissions.
However, the biggest obstacle to the adoption of small hydro power projects agreement has been the tariff for 'power wheeling', which is the cost of the transmission of the power generated from a hydro site to the tea factory using the existing medium voltage power lines infrastructure.
Charging for the line use is common practice in other countries, but it is a new development in Kenya and the decision on the tariff by the Energy Regulatory Commission (ERC) will set an important precedent in determining the supply of electricity by independent producers into the national grid, said the report.
The report further adds that the extent to which the regulation of power wheeling is arrived at using accepted tariff principles and formulae elsewhere, will also have environmental implications that will reduce the depletion of forests and burning of fossil fuels to power tea factories in Kenya.
EATTA is aiming to convince ERC to take into account the methods of tariff setting used elsewhere to deliver the twin policy objectives of increasing the supply of power to the national grid and placing Kenya's tea industry in a more competitive and sustainable position.
It argues that the successful agreement and implementation of a power wheeling tariff at fair tariff rates will create a win-win situation for all stakeholders, with factories accessing green power at a fair price and excess power sold to the national grid resulting in a net increase of supply.
Last year, Kenya produced 377.9 million kilogrammes of tea, earning the country Sh109 billion. All but 12 per cent of the crop is sold in bulk according to the Tea Board of Kenya.
Tea companies in Kenya, which produce the highest volume of tea in the region, employ approximately 800,000 people and affect the lives of another 3 million. These numbers represent about 10 per cent of the country’s total population. Kenya’s tea industry also reached a milestone just a few years ago when the Mombasa Auction in Kenya became the world’s largest tea auction.
Written by Bob Koigi for African Laughter
The period from September to March is the peak season for tea growing in Kenya and, therefore, a time when extra help is needed to cope with the sudden rush of leaf that needs to be plucked. Traditionally, employees bring in their relatives as ‘helpers’ and, since pay at the end of the month is calculated according to the kilos picked, everyone aims to pluck as much leaf as possible.
On a large scale, the tea estate benefits from extra hands to pluck leaf during the peak season whilst the worker’s family is able to earn extra income. The big concern, however, is that these ‘helpers’ are usually under age and their involvement in tea plucking for pay breaches Kenyan law and the international labour organization standards.
This trend has been in existence for long in tea growing areas in Kenya. Last year a shocking story of how tea estates in Limuru were hiring school going children of as young as ten years to pluck tea for them and paying them a pitiful 50 Ksh daily exposed the rot that has existed for long in the tea industry. Women who produce most of the tea grown in Kenya have been complaining that their contribution to the industry, which is the country's leading foreign currency earner, has always been downplayed.
While most smallholdings are owned by men, it is a common practice in Kenya that more of these farms are run by their wives, who play such crucial roles as mobilizing farm workers, participating in tea picking, weeding and tending farms, yet they have put up with discrimination and exploitation in the tea estates.
The tea industry raises a number of health and safety issues. Tea plucking can be hazardous work, resulting in back pains. Workers who cultivate and pluck tea are exposed to toxic pesticides and insecticides, insects and snakes. The work is physically demanding, because pickers must carry the bags of tea to the collection points.
Improper use of chemicals, due to lack of knowledge among the sprayers is a problem that often occurs on tea plantations. As many workers on tea plantations live with their families on the tea estates, lack of adequate housing and sanitary facilities are health and safety issues that are particularly relevant for the tea sector.
Concerns have also been raised over insufficient remuneration for tea-farm workers. On average, workers who are mostly casual workers get four shillings per kilogramme of green leaf, while salaries of permanently engaged team leaders and supervisors range within 3000 shillings and 5000 per month, depending on experience and employer.
One institution however has made it their business to ensure tea production in Kenya follows the internationally expected standards and change the grim picture that is portrayed in tea producing zones in Kenya. Ethical Tea Partnership commonly referred to as ETP is a non-profit alliance of tea companies that aims to guarantee that the tea sold by its members is produced in a socially responsible way.
Since it set base in Kenya in 1997, many tea producers, packers and blenders have hopped on board with the realization that failure to get certification from ETP would spell doom to their teas.
Negative media coverage on, for example, working conditions for women and children on tea estates have greatly influenced EU sales and EU consumers have consistently demanded more information about where the tea they consume come from and how it is produced. As a result, since 1997 a few large tea-packing companies started to work together, in what is now called the “Ethical Tea Partnership” (ETP).
The ETP since then has been striving for improvement of the social conditions under which tea is produced by monitoring and regulating the living and working conditions on the estate, or in the garden or factory of a tea producer. “Some of these violations happen consciously or unconsciously and we have been proactive in letting the tea producers know that tea has to be produced ethically,” says Ms Sarah Roberts Executive Director of ETP.
It is customary on tea estates in Kenya to search staff leaving the factory to guard against theft of company property. Security staff run their hands over an employee’s clothes to check there is nothing hidden underneath – often an uncomfortable situation for female employees when this is done by men. ETP has been negotiating with estates to ensure that a female staff member is always on duty as workers leave at lunchtime and at the end of the day.
It’s a policy which has minimised embarrassment, improved labour relations and proved cost effective for the factories, as they have switched male and female staff on the rota instead of hiring additional staff, a key factor previously inhibiting change. Tea is produced in Kenya all year round and most factories use casual workers in addition to permanent staff.
For the casual worker, it’s a precarious existence; he or she is employed on a day to day basis and if there’s no work – if the weather changes or a machine breaks down, for example – they are sent home without pay. Instead of being paid daily, casual workers are paid at the end of the month and will only receive pay for the days that have been worked, while a permanent worker will receive a full consolidated wage regardless.
Repeatedly using casual labour is against Kenyan law and is an important ETP non-conformance and a breach of standards for all of the certification schemes.
ETP has also been awarding certificates and grading individual tea estates, including tea estates in developing countries. Tea estates are graded after the monitoring visit has taken place. Grades are determined by the Partnership after the monitors’ report has been received. Grades range from A-F: grades A-C merit a certificate, grades D-E do not, Grade F Indicates a fail and estates are removed from the members’ Approved Supplier list, unless they show that they are ready to immediately work to remedy the non-conformance.
However, ETP’s mission goes much deeper. ETP believes that the success of its activities depends on how the tea packers work together with tea growers in finding creative and practical solutions to the problems that occur and therefore stimulates tea producers and tea packers to build secure and sustainable relationships. ETP also helps tea growers become aware of consumer concerns on the one hand, and works on gaining recognition from consumers who buy and drink the tea on the other hand.
Joseph Wagurah, the ETP Regional Manager for Africa, is drawing on his experience of working in the Kenyan flower industry to change this practice. He has begun negotiating with some of the largest groups of producers to persuade them to adopt a seasonal contract, where the worker is employed between set dates, renewable by mutual agreement at the end of the period, and paid as a permanent worker would be.
“The difference between the two sets of employees is the period of employment - while a permanent worker is employed on a permanent basis, a seasonal worker is employed for a defined period of time, usually the high season,” says Wagurah.
“It will take time to introduce this because of the cost implications, but it’s worth doing.
By doing this, producers will not only be taking remedial action against their own non-conformance, but will be fulfilling the aims of the ETP. It will boost the morale of the seasonal employees and hence improve labour relations and harmony in the tea sector,” says Mr. Wagurah
ETP has also rolled out various training programmes in the country which target tea factory managers and estate supervisors. Partnering with Kenya Tea Development Authority (KTDA) and Federation of Kenyan Employers (FKE), ETP has been training the factory managers and estate supervisors on social issue in their workplace for example how to detect discrimination and harassment and how to address it amicably.
The initiative has also sought to train them on legislations both local and international regarding for example child labour and exploitation and the requirements of the tea they produce in the international market.
Also in the offing is a partnership with GTZ the federally owned German organization that works worldwide in the field of international cooperation for sustainable development, for a pilot three year training programme in the highest tea producing zones in Kenya which include Central Kenya and Rift Valley.
Meant for the tea producers the training programmes seeks to train the producers on how to adopt to the impacts of climate change and in their own unique ways mitigate climate change. “We have identified this programme as a perfect way to move from criticism to finding solutions, and since Kenya has been feeling the effects of climate change we feel we can empower the producers to be part of conserving the environment,” points out Sarah Roberts.
Written by Bob Koigi
Worldwide, the closest followers behind the KTDA payment are Sri Lanka, which will pay its small scale tea farmers Sh41.19 per kilo this year, followed by Nepal and India at Sh31.66 and Sh24.09 respectively.
Tanzanian farmers are expected to get among the lowest payments in the world, at Sh9.21 per kilo.
The rising returns in Kenya have already stimulated increased production, with the country's tea production up 8 per cent to 907m kgs this year, from 837 kgs last year, while sales as at September this year have been 203m kgs compared to 211m kilos sold by year end last year.
Hearty demand for tea in the global market assisted in these impressive numbers, pushing the price of supermarket-quality tea up sharply, while from the beginning of this year, adverse weather conditions in many producing countries saw a global shortfall in supply.
As a result, the wholesale price of black tea has risen by 41 per cent since the beginning of the year, surpassing $4 a kg last year. This is the highest price since late 2009, when prices reached $5.45. Kenya is the world's largest exporter of black tea.
Moreover, the price rise may continue, as production shortfalls squeeze the market and demand rises quickly in India and China and emerging markets, according to analysts at the international tea market.
Kenya's tea is also reaching a wider market, exported to 54 countries last year compared to 48 destinations in 2010, and already this year Kenya has captured new markets again, including Togo, Brazil and Cameroon – all of which has had an impact on the price.
“The average net selling price increased to Sh273 up from Sh248.9 per kilo in 2011 and this is a 12 per cent increase. The price has been steadily rising from about Sh138 in 2008 to the current Sh273 this year,” said KTDA Holdings Chief Executive Officer Lerionka Tiampati.
The farmers will start getting their bonus from October 20th, which is usually the agreed payment period between the authority and the farmers.
The authority still believes it can achieve greater returns still, if it can reduce some of the challenges that have pushed up the cost of production, which shot up to Sh77.71 per kg of processed tea from Sh67.47 recorded in 2011, representing a 15 per cent jump.
KTDA has thus embarked on a number of initiatives aimed at reducing energy costs, the main one being development of small hydro power stations.
Written by Bob Koigi for African Laughter
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