Kenya tea farmers threaten to abandon crop as revenue drops
Monday, 17 November 2014 00:00
Reuters: The bushes of tea that blanket the rolling hills of Kenya’s Nandi County, about 300 km northwest of Nairobi, have seen hundreds of thousands of farmers and tea pickers earn a living here for generations.
Kenyan tea farmer
Knight Kerubo and her husband pick tea here to support their five children, but the 26-year-old says she is worried about her job security, because some farmers are threatening to abandon the crop altogether and move to more lucrative ones instead.
“It is definitely going to affect my life because if you uproot this crop where am I going to earn my living because this is the work we do. This is our work, there is no other job for us this is the only thing available so if it is stopped we will be doomed,” she said.
Many small-scale farmers have long relied on harvesting tea bushes in Nandi, helping make Kenya one of the world’s biggest tea exporters.
But ideal weather and bigger harvests, instead of producing bumper earnings, have led to a glut of Kenya’s speciality black tea.
Farmers now earn 40% less for each kg of tea sold than they did three years ago and a number are considering ripping up the plants or diversifying to other income generating projects.
These tea farmers from the Siret Tea Company are planning to develop a plot of land into a six-story building to generate rental income.
“This Tea crop to be honest, we have seen it has become useless because the price has gone down, fertiliser prices have shot up, pesticide prices have gone up now we are deciding to uproot this crop and keep cattle or we grow maize because it’s useless and we have kids in schools, sustenance comes from this tea, clothes come from the tea, taking kids to school is tea but now the prices are down,” said Augustine Bushenei, a farmer.
Such a threat and those of other smallholders, who produce the bulk of Kenya’s output, could spell broader trouble for the east African nation’s economy.
Once uprooted, returning to tea is a long process because a bush only fully matures after seven years.
Last year, Kenya made 114.4 billion shillings ($1.3 billion) from tea, while production jumped to a record 432 million kg – a 17% jump from a year earlier and up 48% over a decade. That made it among Kenya’s top foreign exchange earners, having overtaken tourism after a spate of attacks by extremist groups led to a steep drop in visitors.
Tea prices have been under pressure globally as output and exports from other producers, aside from Kenyan, has risen.
The wider economic argument is no consolation to small producers. More small farmers now produce tea, so even as export earnings rise the proceeds are spread more thinly.
To ensure small farmers don’t switch away from the cash crop or sell land for real estate, experts say the government must introduce a more effective mechanism to cushion price swings and find new export markets for tea from Kenya, which vies with China and Sri Lanka as the world’s top tea exporter.
Aly Khan Satchu is an economic analyst based in Nairobi. “You know the nature of farming is demand and supply and the nature of it is that it tends to react to prices as well and so it is to be expected that we will not have as many tea farmers next year as we had this year because people will look at other options and optionalities that they can replace tea with and I think this attrition will continue just because of the margins in the commoditised tea markets are thin, they are not going to be that high even when the price turns around our tea farmers doing well but they are not going to be driving around the Ferraris because they are not doing the value addition. So unfortunately and I know you have been visiting recently into the tea areas, the doom and gloom is justified I don’t see a big bounce happening anytime soon and you know I think until we reduce supply in effect we are pricing our tea too low. We have to reduce our supply in order to get higher prices,” he said.
For now, 70% of output goes to just five nations with a taste for Kenya’s black tea. One of them is Britain, the country’s former colonial power, where consumption has reached a plateau, while others are Egypt, Sudan, Afghanistan and Pakistan, where political turmoil has hit purchases in the past.
With so much at stake, Agriculture Minister, Felix Koskei visited Nandi, last month to urge farmers to keep growing. He promised action, saying there were plans for a price stabilisation fund to cushion farmers against fluctuations.
About two-thirds of tea comes from small-scale farmers, most of them members of the Kenya Tea Development Agency (KTDA), which became a cooperative after it was sold by the state in 2000.
The rest is produced on big farms run by firms such as Williamson Tea Kenya and Unilever.
KTDA, which represents 560,000 farmers, offers a guaranteed sum for each kilogram of tea on delivery plus a sum paid annually linked to global prices.
Overall, farmers received 31.61 shillings (35 US cents) per kg in the 2013/14 season, down from 50.01 shillings (55 U.S. cents) in 2011/12.
Wilson Kosgei grows tea on six acres of land, he has since diversified to cultivate vegetables on a further two acre plot, which he says sell easily and grow faster than tea.
“The government should look for more markets, abroad, the government should abolish tax because if they add the luggage to a donkey which is already burdened that is, I think, we are finished. So we don’t see why we should be having tea in the first place, and if I grow my Managu (black night shade), I don’t pay tax. I just go into the market and sell and come back with my money,” said Kosgei.
To help farmers, the country’s tea development authority has asked the government to simplify a list of 24 taxes said to affect growers, including scrapping a 1% tax on exports introduced last year.