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On Tuesday 17 June the Ethical Tea Partnership (ETP) and IDH – The On Tuesday 17 June the Ethical Tea Partnership (ETP) and IDH – The Sustainable Trade Initiative brought together 150 delegates from within and outside the tea industry to discuss the fundamental issues affecting tea sustainability. TEAM UP 2014 – CHAIN REACTIONS welcomed a diverse array of speakers and guests to analyse issues, assess progress, and catalyse the next set of ACTIONS that will make the tea industry better and fairer for all parties along the tea value chain. Thank you to Marks & Spencer for being our offset sponsor and The CarbonNeutral® Company for calculating the emissions associated with TEAM UP 2014 Sustainability in the Tea Sector: Now and Tomorrow From left to right: Ajoy Misra, Andy Brown, Alfred Njagi, and Kaushik Saikia We were delighted to welcome senior executives is making all the money? Representatives from from major tea producing and packing companies to every stage of the value chain were involved in kick off the meeting: the discussion, including major retailers who are often highlighted as part of the problem. They • Ajoy Misra, CEO & Managing Director, Tata explained the competitive challenges they face and Global Beverages the relatively low level of margins in retail. They • Andy Brown, Managing Director, Taylors of also expressed “we want to be part of the solution, Harrogate and that’s why we’re here today.” This is one of the • Alfred Njagi, General Manager of Operations, benefits of the TEAM UP events, as they are one of Kenya Tea Development Agency (KTDA) the few opportunities for the entire value chain to get • Kaushik Saikia, Senior Manager (Sustainability), together and tackle key issues head on. McLeod Russel This led to an important discussion about the Our facilitator, Peter Knight, jumped straight in with demand side of the equation. The Asian and a question about money and the price of tea, which Middle Eastern markets continue to be strong, has dropped substantially in Africa. which has supported tea prices in Asia. There was a consensus about emphasising tea quality A range of factors, from weather conditions, to to consumers so that the perception of value new areas being brought into tea production, to is changed, with everyone along the supply improving productivity has led to increasing volumes chain having a role to play in it. There were also coming into the market. There was much discussion suggestions as to how an objective measure of about whether too much tea was a bad thing; the quality could help. different needs of different markets (domestic markets continue to grow in Asia while Western Other ideas included: making tea more glamorous markets are static); and whether the supply base like coffee has managed to do; develop tea shops was appropriately focused. and create a romance around drinking tea socially; and promote the many and varied health and So if farmers in Africa are feeling the squeeze as medicinal benefits that tea offers. Perhaps the costs of production increase and prices fall, who most exciting idea was Andy Brown’s, of finding the George Clooney for tea, given the boost he’s had on Nespresso. This was supported by Peter volunteering Alfred to be the ‘ethical George Clooney’. The four speakers then highlighted how they viewed sustainability issues and the way they implement sustainability programmes. KTDA has put major investments into improving the livelihoods and sustainability of their farmers by running major partnerships on certification, farmer field schools, and climate change - with many of the organisations at TEAM UP. These have brought substantial benefits and enabled their farmers to weather market changes much better than other However, wages and benefits packages are set smallholders. nationally or regionally, not by individual companies. In many countries in-kind benefits make up a large For Andy Brown and Ajoy Misra sustainability is proportion of the package and cash wages. This embedded into their strategies and the relationship affects how changes can be made, for example, that they have with suppliers. “We invest in Kaushik explained how the Plantation Labour Act in sustainability because it’s fundamental to the values India can be a constraint to change. of our business. We work with whomever we need to achieve our goals (ETP, government etc). Building Tea is produced in some of the poorest countries relationships is key to this,” Andy Brown. in the world. In India, Tata is involved in many sectors and Ajoy confirmed tea regions are just Kaushik commented on the importance of capacity one example of areas where India needs to figure building and the need for organisations such as out how to bring millions of people out of poverty. ETP. Sarah Roberts, Executive Director of ETP, Comments from the floor focused on how the emphasised the need for any capacity to be co- amount of value going to labour compared to the designed with producers to ensure good results. In value going to capital is in general decline the world addition the amount of learning that ETP receives over, and that low wages is not an issue that is just from producers and partners is invaluable and can faced by the tea sector. be shared between regions. There was agreement that workers, smallholders, The issues of how greater value to workers and and their employees need to make a decent living smallholders could accrue was a key topic, with from tea if the industry is to be truly sustainable questions from the floor about wage levels for tea and for future production levels to be maintained. workers and what could be done within the value However, changes need to be made carefully so that chain to enable higher wages to be paid. It was the industry can thrive, otherwise the result might be felt that the work that ETP and Oxfam, supported increased unemployment. It’s therefore important to by IDH, has helped to clarify the issues and the look at ways of ensuring there is sufficient value in structural changes required. The tea sector is one the system particularly at the production level. There where legal requirements on wages are being met. were questions and ideas about how changes in market mechanisms could potentially support this. There was also agreement that, as with other labour intensive industries, the tea industry needs to look at how its human resource practices are going to adapt for the modern world and how job quality is going to develop. Comments from the floor focused on the need for the entire value chain to do things differently. This is why the wages consortium that ETP and Oxfam are leading is so important as it brings the different stakeholders together and is focused on how structural issues can be addressed. The importance of Tea Smallholder farming with Sir Ian Wood Sir Ian Wood, Chairman, The Wood Family Trust The Wood Family Trust (WFT) was established Key observations from the work of WFT: by Sir Ian Wood and his immediate family in 1. Tea estates need to pay more attention to their September 2007 to invest in economic, community, supply chains. Smallholder supply is increasingly and enterprise initiatives in Sub Saharan Africa and important and more support is needed for the UK. extension services and quality incentives. 2. The ‘bush to cup’ value chain is skewed towards In Africa, WFT is in partnership with the Gatsby the cup and smallholder livelihoods are poor. Foundation, in supporting the development of the Raising the price of tea is difficult but the smallholder tea sector in Tanzania and Rwanda, industry could learn from coffee and put more where many farmers’ livelihoods are still marginal. focus on differentiation. More efforts must be They are making major investments in the sector made to ensure a fairer distribution of value and applying the principles of venture philanthropy along the supply chain. Establishing a living in a very innovative way. wage for all territories needs to be the starting point. The Chai project in Tanzania has focused on 3. There is a lack of competition and cooperation improving smallholder quality and productivity, between factories. For example, KTDA and the efficiency of associated factories, which smallholders benefit from KTDA’s ability to were not functioning at full capacity. In Rwanda, bulk buy fertilisers. Tea factories from different the Imbarutso project is supporting smallholders to companies could take a lead from other improve their yield and quality. WFT is also investing industries and make arrangements to bulk buy in two Rwandan factories with the aim of eventually inputs together. transferring full ownership of both factories to the 4. Philanthropy cannot be the main support smallholders so that they increase their share of mechanism. It should be used to complement made tea price (currently at 25% compared to 75% other structures and systems, and should be for Kenyan farmers). The Kenya Tea Development part of co-designed programmes. Agency (KTDA) is bringing in their expertise to 5. Factory ownership by smallholders, such as the support the project implementation. case with KTDA, is one of the most effective ways of increasing value to smallholders. In the Sir Ian explained that with a background in oil and WFT project in Rwanda, smallholders currently gas, his was very much an ‘outside’ perspective own 40% of the factory (WFT 60%), and the plan but certainly from the audience’s viewpoint a very is to transfer full ownership to them over the next valuable one. few years. 6. In the future smallholders should look into being packers and developing their own brands. However, initially they should focus on improving their own business practices such as productivity, quality, and transportation. Announcement from Mr Rachmat Badruddin, Chairman of the FAO Inter-Governmental Group on Smallholders Mr Rachmat Badruddin Recent dynamics in the global tea industry had Mr Rachmat Badruddin therefore took the made the Working Group on Smallholders, under opportunity on behalf of the Government of the FAO’s Inter Governmental Group (IGG), even Indonesia and the Indonesian Tea Board to warmly more relevant.
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