Falling Leaves – Kenya’s farmers falter as tea prices drop

This article was published on 28/01/2014 on the (sadly now defunct) ThinkAfrica Press website. It was the result of work done in central Kenya at the end of 2013.

The end of the year is bonus season in Nyeri, the centre of Kenya’s tea growing region. Every year, farmers in the foothills of the Aberdares and Mount Kenya, hills thick with the precious crop, receive their annual dividend and descend on Nyeri to paint the town red. The bars and butcheries overflow with men splashing out on beer and barbecqued 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 when the tea farmers make 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 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, but rather are shareholders in whichever factory they supply. Thus they are paid according to both the amount of good quality tea they supply to the factory and the fluctuating price of the finished product.

Usually, there is not much of a problem, but 2013 was different. The price Kenya received for its tea exports plunged by a third from around three US dollars at the start of the year to two dollars twelve months later. With this collapse, dividend payments have also fallen sharply. Some dividends are a tenth less than they were last year, others have 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.”

The cause of their 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. Kenya may supply tea-obsessed Britain with most of its tea, but it is Egypt which is the single largest destination for Kenyan tea exports, buying fully a fifth of what the factories around Nyeri produce. But, with the army’s coup and ongoing campaign against the Muslim Brotherhood causing continued political instability there, demand has fallen 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 two million dollars 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.”

It is a danger which 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.”

It is not just 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. 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 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. 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 diversify, buying milk cows or trying to grow vegetables, but these 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 the means to buy a cow or vegetable seeds. Even 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.”