In a previous Op-Ed column in this newspaper a week ago, I made this bold claim: that with my over 26 years of experience working in the tea sector, there was no doubt in my mind that tea farmers should be earning a great deal more for their crop.
Now it is easy to make such a statement, but defending it is another thing altogether. Nonetheless, I stick to my guns and explain my view as follows:
The main problems facing the tea sector and proving to be barriers to greater rural prosperity in the tea-growing areas are all just a matter of internal policy. We do not need any magical solutions from outside. We are, after all, the number one tea exporter in the world.
Mind you I say that we are the number one exporter. Not the number one producer. China and India produce more tea than Kenya. But their populations are so big that they end up consuming almost all the tea they produce. Kenyans only consume about five per cent of the tea we produce.
So, our unique circumstances require that we treat tea as an export crop, which will only prove to be profitable for Kenyan farmers if we have a trade, logistics and supply chain that has a world-class level of efficiency and transparency. And as we quite obviously do not have such a system yet, there is an urgent need for continued reforms in the tea sector.
Here are the three key policy changes I would like to suggest as the keys to greater earnings for tea farmers.
First is that there has to be a better Price Discovery Mechanism, which provides for greater transparency, cuts red tape, and opens up the field to more players. It's about time we leveraged science and technology to have teas' value and price based on quality performance beyond the garden mark, and have this done within record time, and resultant reports shared to all interested parties, so they are only left to make commercial buying decisions.
Modern science enables this based on all known tea quality parameters, complete with measurable values to allow comparison of one tea and another, monitor quality at production; match buyer needs with available teas on offer; and, most importantly, avail this information simultaneously to all interested buyers so they all meet at the trading floor to compete for the available teas, making it the Best Price Discovery Mechanism.
The current trading approach based on a buyer receiving a sample to make a buying decision disenfranchises thousands of potential and prospective buyers as not all of the prospective buyers receive the sample, given the distributable 4kg is too small to be distributed to all of them.
Second is that there should be a much shorter period within which factories are paid. Basically, the time it takes to convert processed tea into cash in the producer bank account. Under the current system, factories owned mostly by smallholder farmers have to borrow to meet their running costs as well as to pay farmers. These added financial costs eat into the receivables. Cash turnaround must be reduced to reduce financial costs.
Third is what is perhaps the most important. We need to restructure the tea industry to remove predatory structures that eat up the farmers’ real and potential earnings.
Farmers are caught up in vicious debt traps and avoidable non-value adding services for own survival, convenience and conformance. Any chargeable service to farmers should only be retained for its value. The same goes for talent and visioning, including the processes of acquiring the same.
And I feel that I can make the bold claim that if these issues were sorted out, two major benefits would immediately follow.
First is that farmers’ earnings from their tea deliveries could potentially double.
And second is that the post-production transaction costs for the tea sector would be reduced by more than 70 per cent.