Kenya risks losing its competitiveness in the tea industry

Kenya’s competitiveness in the global market is at great risk as a result of the persistent and often destructive industrial unrest, which has continued to plague the industry in the recent past.The industrial action has led to losses in the tea sector, which arise, from overgrown tea that has not been plucked and the stalled processing at the factories. The strike started on October 17 with workers demanding a 30 per cent increase in salaries, which was awarded by the courts in 2016.

Unless reversed, the industrial unrest situation in Kenya that is currently concentrated within plantation tea producerscould easily plunge the entire sector into a crisis by sucking in small-scale individual tea farmers. Indeed, the conflict is now slowly, but steadily mimicking what happened to tea farming in South Africa, which has been grounded due to violent industrial disputes.

It is,however, gratifying to note that the three-week strike that had nearly crippled the sector has been called off to allow for the Court to hear the parties as it seeks to resolve the conflict.The three-week strike that resulted in production losses of up to nearly a billion shillings for tea plantation firms based in Kericho, Bomet, Limuru, Sotik and Nandi regions was called off on Tuesday by the Kenya Plantation and Agricultural Workers’ Union (KPAWU) in response to an order by the Employment and Labour Relations Court for the suspension of the strike with all parties required to meet in Court next week on Monday.

Such persistent actions by the tea workers through KPAWU and with the current call for boycott of the produce pose a risk to the tea industry, which is the only surviving commercial crop in the Kenyan economy.  The tea plantation firms operating in these tea zones argue that tea farming is already weighed down by rising cost of production up to over 54% with labour costs taking the largest component that could discourage investments and further hurt the economy.The major tea industry players, processors and exporters depend on the small holder tea farmers for up to 50 per cent of their production due to lack of tea mechanization that would otherwise reduce the cost of tea harvesting. The proposed rise in salaries would basically make it almost impossible to get anything meaningful from the cash crop that is the mainstay of the tea growing regions.

If you look at South Africa, the tea producing industry has been in decline since 2000 due to a host of factors such as significant increases in production costs occasioned by a regulated labour market, unfavourable international tea prices, removal of tariffs and increased competition from other producing countries such as Kenya. This culminated in closure of most of the tea estates leaving a few tea estates in precarious financial positions and operating on stringent budgets.

The tea industry in South Africa was one of the oldest agro-based industries with huge direct employment numbers mainly in the remote rural areas who were mostly affected with the crippling of the sector.

If the industrial unrest in the tea sector in Kenya continues unchecked, with the strike allegedly turned to criminal activities such as burning of property and threats to life and the union now calling for international boycott of the produce, Kenya may start to lose its competitive advantage in the tea industry.

Such criminal activities as witnessed in the just concluded strike, may be counter-productive for the workers themselves who depend on the produce for their livelihoods, as operations in their tea factories are likely to be grounded.

It is evident that the plantation tea producers under the auspices of the Kenya Tea Growers Association (KTGA),support close to one million Kenyans who are employed directly or indirectly in the tea industry.

Kenya boasts as the 3rd leading producer of tea in the world, accounting for 10 per cent of the total world tea production and the largest exporter of tea in the world, accounting for 22 per cent of the total world tea exports.

Further, the tea sector is the largest industrial earner of foreign exchange into the Kenyan economy and a hugesource of revenues for the government, contributing 4 per cent of the Country’s Gross Domestic Product and 26 per cent of the country’s export earnings.The sector also contributes significantly to rural development in the country with majority of the Kenyan rural households depending directly or indirectly on the commodity for their livelihoods.

It is important to note that with tea industry wages at twice the agricultural sector minimum wage following historical above inflation pay rises and all tea industry offers continuing on that trend, there is need to seek alternative actions to the industrial strike stalemate that is amicable to both the employers and employees in the tea sector.

Dr. Catherine Kunyanga

Lecturer UON Department of Food Science, Nutrition and Technology