Interview: Moses Changwony

How can small-scale farmers insulate themselves from rising costs and increased global supplies?

MOSES CHANGWONY: The cost of labour on plantations, especially those close to Nairobi, is very high. Our estates have to compete for workers, particularly against the construction industry. Construction pays more than the agricultural industry can afford, and to match that would make tea and coffee too expensive to sell. We also have no control over the international price structure. It is aligned with quantities available in the market. An oversupply does not take into account the local cost of production. Across the tea sub-sector, which is traditionally one of Kenya’s highest foreign exchange earners, this has been a very challenging development, especially in 2014. The only way to cushion farmers in the future is to look at how they can diversify their agricultural activity so that tea is not their only source of income.

One way to look at this is to see how other sectors that complement tea can be strengthened, such as livestock or dairy. The prices we have seen this year have affected cut, tear and curl (CTC) teas more than orthodox teas or green teas. Going forward, we may want to also think about diversifying the product line, as Kenya produces predominantly CTC tea. I believe that these steps are the only options.

What are the real challenges in branding Kenyan tea and coffee on international markets?

CHANGWONY: Going forward, Kenya must consider branding its own tea and coffee and pushing it to international markets. This should be structured in such a way that tea specifically goes directly to distributors as a Kenyan brand, bringing back a bit of that value. Of course the first challenge is market penetration. Kenya consumes less than 5% of its own tea and coffee, so we need to start at home.

There are also many internationally established brands that serve as serious competition to any new brand trying to penetrate the international market. The reality is that the biggest consumers of tea and coffee at the end of the value chain have not had an opportunity to taste a whole Kenyan cup of tea. This 100% blend is some of the highest quality product available on the market. As industry players, we are increasingly trying to see how we can eventually get a brand into the international market.

Transnational Bank

The Kenya Tea Growers Association serves as an outfit for all tea growers in the country; however, it has not been able to move beyond Kenya. All of us as farmers have met and contributed to establishing this organisation. We believe it would be a very effective vehicle for reaching international markets.

On the coffee side, there is a real challenge with regard to the quantity produced in Kenya – roughly only 40,000 tonnes annually. Even if we were to engage one of the biggest distributors in the international market, the volume we produce here would not satisfy that demand. Before we think about mainstream Kenyan coffee as a final product in a strategic market like Europe, we must look at ways of increasing production. As it stands, we can only access niche markets. Specialty coffee represents an interesting opportunity, and only there is it possible to look at strategic partnerships with roasters.

What are the prospects for increasing value addition in Kenya’s agricultural sector?

CHANGWONY: When we look at value addition for tea and coffee in Kenya, selling any of these products semi-processed at perhaps 50% of the value chain clearly prevents you from benefiting from the remaining added value. Most of our tea is sold through auction where you might get a value of $2.30 per kg. If you take that down to the next level of the value chain – processing, packaging, branding and making it available to distributors – you add another $1.30. This value is normally lost to everyone not on the retail side of the business. If we can move it a step further in Kenya, then a little more value will trickle back.