Africa: Falling Leaves – Kenya’s Farmers Falter As Tea Prices Drop

Nyeri, Kenya — Thousands of miles from the streets of Cairo, Kenyan farmers are feeling the effects of Egypt’s instability as demand for tea falls significantly.

The end of the year is usually bonus season in Nyeri, the centre of Kenya’s tea growing region. At this time, farmers in the foothills of the Aberdares and Mount Kenya, hills thick with the precious crop, receive an extra annual dividend and descend on Nyeri to paint the town red. The bars and butcheries overflow with men splashing out on beer and barbecued nyama choma – a national favourite – while merchants and prostitutes make the two hour journey north from Nairobi hoping for a share of the windfall.

This is the time that tea farmers typically make much of their money. They receive a monthly payment, but that is not usually enough. “I spend all of my monthly income on running my farm,” says Joseph Kamau, a tea farmer from the Aberdares. “The [end of year] dividend is how I make enough money for the year ahead. I need it to survive and pay for a few small luxuries.”

Individual smallholders like Kamau are self-employed, cultivating a thousand or so bushes of tea and selling the green leaves they produce to one of the area’s factories. They receive no steady wage – though they are shareholders in whichever factory they supply – and they are paid for their tea according to the amount of good quality produce they make available.

That sum can fluctuate, however, depending on current market price for the finished product. Usually, that does not present too much of a problem, but 2013 was different. The price Kenya received for its tea exports plunged by a third from around $3 at the start of the year to about $2 twelve months later. With this collapse, dividend payments also fell sharply. Some were a tenth less than they were last year while others lost closer to a quarter, and now the normally prosperous tea farmers are struggling. Daniel Mwangi, another farmer, echoes many in the region when he says simply, “The tea does not bring enough.”

Falling demand

The cause of the farmers’ problems lies far to the north of the cool, tea-covered slopes of the Aberdares, in the heat of Cairo and the continuing fallout from the Arab Spring. In 2010, the last year before the uprising in Egypt, Kenya supplied the tea-obsessed UK with around half of its tea, but Egypt was the the single largest destination for Kenyan tea exports, buying nearly a fifth of what the factories around Nyeri produce. With the overthrow of President Mohammed Morsi in July 2013 and the ongoing campaign against the Muslim Brotherhood causing continued political instability, demand has plummeted and prices have gone with them.

“It’s a supply and demand issue,” says Chai Kiarie, Field Services Manager at Gitugi Tea Factory. “We produced more tea this year, but we still made nearly $2 million less than we did last year. With these problems abroad, the demand just isn’t there.”

As the ripples from Egypt’s unrest spread down the Nile and into East Africa, the consequences for the individual farmers are dire. “Lately, most of our people have found themselves borrowing from the bank to make up the shortfall from their monthly payments,” explains Paul Kangari, Director of the Chinga Tea Factory, one of the largest in the region. “They are living from loan to loan. They expected the bonus to make up for it, but with the price of tea so unpredictable, there is a danger that the bank will take their farms and they will have nothing.”

The financial dangers facing tea farmers is exacerbated by Kenya’s extortionate interest rates. Banks frequently charge upwards of fifteen percent for loans and without a decent dividend payment, farmers have little choice but to borrow more money and fall further into debt. Kangari is certain that the situation for farmers is perilous: “If a farmer borrows a lot of money he will not be able to repay.”

Without a plan

However it is not only the farmers who are in trouble. Each factory is supplied by thousands of farmers (the largest has over 7,000), but they in turn will each have a few labourers working for them. And even beyond those directly affected, much of the economy around Nyeri relies on the tea farmers and factories to bring money into the region, as the usual end-of-year bonanza shows. With the farmers in debt and their labourers having to take a pay cut, the bars and butcheries are emptier than usual and the stall-holders wear disappointed looks.

On a national scale, problems in Egypt have the potential to cause havoc in the wider economy too. Tea is Kenya’s second largest export, behind other horticultural products, and along with tourism earns the country much of its foreign exchange revenues. If the price of tea does not recover, it is not only the people of Nyeri who will suffer.

It is not clear what will happen next. Some farmers are trying to spread their income activities, buying milk cows or trying to grow vegetables, but these strategies have problems of their own. “I am trying to diversify,” says Kamau, “but I don’t know what to do. The only advice I can find is for farmers in England or America. I have been experimenting with greenhousing, but my first attempt was a failure and it can be very expensive.”

Those in serious debt lack even the means to buy a cow or vegetable seeds. And those who do have some money often do not have the expertise to cultivate anything other than tea, nor do they know where to go for advice. For now, most tea farmers can simply hope that, far away in Egypt, 2014 sees things begin to improve. If they do not, Kangari says, “The farmers don’t have a plan.”

Chris McKeon is a graduate of Cambridge University where he focused on African history, receiving a BA in History and an MPhil in African Studies. He tweets in a personal capacity at @cjmckeon.

Read the original of this report on the ThinkAfricaPress site.

Article By: Chris McKeonJanuary 28, 2014