Tea sector needs sustainable solutions

Agriculture Cabinet Secretary Peter Munya. FILE PHOTO | NMG

By BITANGE NDEMO
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Summary

• Re-introducing governments into commercial activities of the tea sector may undermine SSTGs in the near future and perhaps may destroy the sector in the same way the coffee sub-sector was affected.
• Technology brings transparency in decision making, the pricing and disbursement of resources.
• It is best in rooting out corruption since it will empower the farmers to understand the margins at every layer of the enterprise and enhance their skills to negotiate fair deals for their produce.

When the Agriculture Cabinet Secretary (CS), Peter Munya, recently embarked on reforming the tea sector, his was seen as an effort to sustain the tea growers. But these efforts risk excluding the 420,000 small-scale tea growers (SSTGs) in the country and might not address their sustainability in the long run.

Even though the CS is responding to the complaints from small tea growers that they are being exploited by the Kenya Tea Development Agency (KTDA), the problem seems to be bigger than just the deprivation.

Although the problems are defined variously, the overriding one is corruption. There is also the manipulation of SSTGs’ collective voice through differentiated payment. Considering that most SSTGs are unaware of their rights and entitlements, there are too many middlemen exploiting them by depressing the value of tea produced and taking huge profits.

In essence, those charged with the responsibility of managing the affairs of some the SSTGs have taken advantage of the goose that lays the golden eggs. It is this very same practice that precipitated the change from original Kenya Tea Development Authority to the current KTDA. The risks of switching to the old institutional arrangements include increased cost to run both the Tea Research Foundation and Tea Board of Kenya and dealing with both the county and national governments, further undermining SSTGs.

Therefore, the solution needed must be radically different. We need a solution that will also take into account the declining prices in the global market by developing a sustainability strategy to address the farmer’s long-term needs.

Re-introducing governments into commercial activities of the tea sector may undermine SSTGs in the near future and perhaps may destroy the sector in the same way the coffee sub-sector was affected.

In my view, the problems afflicting the tea sub-sector could be resolved much more efficiently by introducing technology, organising tea factories into independent cooperative societies, creating a single regulator in agriculture and putting the East African Tea Trade Association Auction (EATTA) house under the regulation of the Capital Markets Authority.

Since the future will be driven by data, many countries are now leveraging on blockchain technology to help small farm producers to track the provenance of the produce and thus create trustworthy product supply chains. This builds trust between producers and consumers. This can enable organic producers to earn more money for their produce. In Sri Lanka, for example, the small tea organic producers introduced a fair trade that enables them to earn more money from their specialty product.

The technology brings transparency in decision making, the pricing and disbursement of resources. It is best in rooting out corruption since it will empower the farmers to understand the margins at every layer of the enterprise and enhance their skills to negotiate fair deals for their produce.

This is unlike the current opaque system that favours middlemen. The technology also provides a reliable source of truth on the state of farms, inventories and contracts along the supply chain.

Blockchain technology works best for cooperative societies by enabling every member to know the production data from every member, the earnings, and the cost of their operation throughout the entire supply chain.

The factories will become the units of aggregation and can bid directly to a modified auction that is regulated by the CMA thus eliminating the current façade of self-regulation.

In my view it is unnecessary to create multiple regulatory bodies in agriculture like Tea Board, Coffee Board and Sugar Board.

The sustainability of SSTGs depends on how best we develop effective regulatory regimes, enable forces of demand and supply dictate pricing and less government in business.