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How Kenya farmers float tea companies: Lessons for Nigeria

The name Kericho is synonymous with tea production in Kenya. Located in the highlands on the western side of the Kenyan Rift Valley, a distance of about 264km from Nairobi, the Kenyan capital, the town has stunning tea plantation scenery, tantalising aroma of fresh vegetation and fantastic weather similar to that of Mambilla Plateau, the tea producing hub in Taraba State – Nigerian.

During the Conference of African Science Journalists organised by Media for Environment, Health and Agriculture (MESHA) in Nairobi, a Kenyan friend agreed to take this reporter to see some of the tea plantations in Kericho.

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Having been assigned to do a story on tea production in Mambilla Plateau in Gembu, Taraba State a month earlier, I could easily compare and contrast Kericho with Mambilla: similar climatic conditions, scenery, vegetation and topography, which make both towns ideal locations for agriculture, particularly large-scale tea cultivation.

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One thing that contrasts the two towns, however, is while Kericho has large expanse of tea plantations that seem to meet the sky from whichever end one views them because of size and well-structured system that ensures sustainable cultivation and economic benefits to the farmers, tea production on Nigeria’s Mambilla Plateau presents drying up plants because of the failure of government to create the enabling environment, and the farmers’ inability to organise themselves for growth.

In Kericho, it is easy to see thousands of hardworking tea pickers in the endless tea plantations busy in the over 12 tea estates across the town. Also, Kenyan farmers own the country’s most vibrant tea company, KETEPA Limited.

 

How farmers own KETEPA and KTDA

KETEPA is owned by smallholder tea farmers through the Kenya Tea Development Agency Limited and the Kenya Tea Growers Association (KTGA). A total of 60% of the company’s shares is owned by Kenya Tea Development Agency.

The Kenya Tea Development Agency (KTDA) is owned by over 550,000 small-scale tea farmers spread across the country.

The company, through its online platform said “These farmers own over 60 tea processing factories countrywide and produce over 60% of all the Kenyan tea… others together own 38 tea processing factories, and produce about 40% of the tea produced in Kenya.”

Kenya Tea Development Agency Limited (KTDA) in an online statement said the agency “was incorporated on 15th June 2000 as a private company under (CAP 486) of the Laws of Kenya, becoming one of the largest private tea management agencies. The agency currently manages 66 factories in the small-scale tea sub-sector in Kenya.

“The agency is mandated with promoting and fostering the growth and development of tea growing among the indigenous tea farmers.

“Its mandate is to oversee and enhance the end-to-end processes from the cultivation of tea to the marketing of same to local and international markets.”

According to the International Finance Corporation (IFC) of the World Bank Group, which provided US$12 million loans in 2013 to KTDA to finance the construction of a new warehouse complex for tea handling and storage, the agency has 550,000 small tea farmers as individual shareholders. The tea companies collectively own 66 tea processing factories.

KTDA emerged from the privatization of the Kenya Tea Development, a parastatal agency created in the 1960s to support small farmers. Its services cut across the entire tea value chain and include inputs and agri-extension, transportation, warehousing, processing, marketing, and financing.”

IFC also noted that to ensure a stable supplier base for KTDA, there are strong legal incentives for farmers not to side-sell to other factories. Regulation by the tea board also ensures that tea factories are not set-up where there is no base of small farmers. Such policies are important enablers for KTDA’s success as a private company.

Although the Managing Director of  KETEPA, Mr Albert Otochi, is yet to respond to my email requesting information, the financial details from IFC shows that “As of 2013, KTDA was the second largest exporter of tea in the world.  Over 60% of the tea produced in Kenya is grown at KTDA farms. KTDA’s 66 tea factories produced 1.1 million tons of tea worth around $800 million in revenues in 2012-13.

It says that Unilever buys about 30% of KTDA’s annual tea production. The farmers cultivate tea on over 126,000 hectares.

Farmers deliver tea to 3,200 buying centers managed by elected farmer-based committees across tea growing regions in the Rift Valley and East Rift Valley. Tea is weighed, graded, and valued at these centers – any green leaf that doesn’t meet quality standards is rejected. Tea is then transported by factory-owned trucks to KTDA factories for processing, packaging, and distribution.

 

Sad situation in Nigeria

While Kenyan farmers are making money through the structure created by the government, Nigeria has no agenda to develop its tea industry, majority of the country’s 193 million people drink tea.

In Gembu, farmers are wailing. Alhaji Mbu Lamu paints the dark picture of Nigeria’s tea industry: no processing factories to create competitive environment and farmers are abandoning the production for something more economically rewarding.

For now, the Federal Government does not have tea farmers on its agenda and so has turned a blind eye to their plight. How long that will last? Only time will tell.

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