How Kericho farmer pulled tea estate out of the debt trap

Kim Martins exudes copious amounts of self-confidence as he shows us around the 1,000-acre Chesumot Farm in Kericho that he manages.

Although the place is better known for its core business — tea production — it is actually a mixed farming enterprise.

Besides dairy cattle that produce more than 200 litres of milk daily, Mr Martins owns sheep, geese, horses, a eucalyptus tree plantation and 15 acres of stevia, a natural sweetener.

“The sheep for instance help me keep the grass thicket in the eucalyptus plantation short, while the geese maintain security. These sustain the business by cushioning fluctuations and trimming the cost of input,” he says.

He holds the tea farm dear, being an inheritance from his late father Bill Martins.

Described by his son as a hardworking man with great dreams, Bill Martins was educated by missionaries after his white colonial settler returned to Europe.

He would become the first mayor of the Kipsigis County Council in the early 1960s and later a general manager for the National Cereals and Produce Board.
In 1974, Bill Martins bought the 1,000-acre piece of land on which Chesumot Farm now stands from a white settler.

The younger Martins faced challenges when they first inherited the farm in 2006.

“We had sat and watched how he worked, but reality dawned on us when the entire project was left in our hands,” says Mr Martins, who studied business at the University of Guelph in Canada.

He says the business fortunes began to decline all of a sudden, something he blames on poor management and inexperience.

“The worst was yet to come. There was an unusual dry spell that hit the country in 2007 that made us record the lowest leaf production ever of 6,000kg.  This is when major challenges began,” says Mr Martins.

With returns unable to cover farm maintenance — which included the cost of fertilisers, pruning, weeding and paying more than 2,000 pluckers — Chesumot was in heavy debt.

“We fell into close to Sh10 million losses and were just at the point of selling the business,” says the billionaire farmer.

In despair, his brother David Martins — who was the farm manager then — called for a family crisis meeting to plan how to save the company. They discussed a revolutionary plan that would double the acreage under tea in five years.

“Although we well knew that we were settling for a costly venture, it was a realistic way of regaining our stability. We knew that once an estate grows, it will generate more profit that will shield the cost of input,” he says.  

A single seedling of quality tea costs a minimum of Sh10 and 500 plants are needed per acre. On the other hand, fertiliser worth Sh4,000 is required for every acre. This meant that Sh1.6 million would be used to buy farm inputs, minus the cost of labour.

Mr Martins needed to closely supervise the farm as he sought ways to settle the huge debts. “That’s how I quit my job of 17 years,” he says. Until then, he worked at Unilever Company as a manager for safety, health and environment.

He approached the Kaisugu Tea Company, which processed their farm produce.

Technical support

Kaisugu managing director Charles Kipngok was sympathetic having seen Chesumot estate produce hundreds of thousands of kilogrammes of tea down to less than 10,000kg. Mr Kipngok was willing to help the giant get back to its feet.

Through an initiative that economically empowers growers by helping them manage their farms and providing extension services, Chesumot was jumpstarted.

“In phases, we were supplied with seedlings, fertilisers and other farm inputs on credit and free extension services to cap it. The amount, which was close to Sh1 million would be deducted monthly based on the tea leaves delivered to the company,” says Mr Martins.

However, this was not an immediate solution since tea requires three to four-year maturity period for one to realise returns on investment. Sealing loopholes that invited little returns was the next strategy.

Mr Martins planned to acquire harvesting machines as a way of cutting the cost of production. Out of the 2,000 workers who were employed, he sent home 1,700, only retaining Form Four leavers and those with higher qualifications.

The machines, he says, increase production since they keep the bushes at one level, allowing only the buds to come up.

As the farm slowly began to pick up, horses replaced cars as a means of patrolling the farm, as maintaining them was cheaper than fuelling a car. Horses also quietly moved through the farm without alarming possible trespassers.

“As we speak, we have 535 acres of green tea,” Mr Martins says with a smile. He notes that the gamble to quit his job is paying off, with the farm recording an average net monthly profit of close to Sh5 million from tea alone.

Production increased from 6,000kg in 2007 to 2.3 million kilogrammes in 2013.

It is expected to grow to more than three million kilogrammes this year and 3.5 million kilogrammes in 2015.

As part of the expansion and product diversification efforts, Mr Martins also planted a 300 acres of medicinal purple tea that was released to the market in 2011 by the Tea Research Foundation of Kenya (TRFK).

The varieties, TRFK 430/90 and TRFK 371/3, were released after 16 years of rigorous testing and experimentation and are early maturing, drought- and disease-resistant.

“With the purple tea, I got the satisfaction that my dream was fulfilled,” says Mr Martins.

The farmer, who was the first in the South Rift to plant the purple tea, says he saw the clone as the future of the tea industry, citing the consumer trends whereby people are increasingly becoming conscious of their health.

Due to its uniqueness, the product is exported to countries like Japan at a price of around Sh2,250 per kilogramme, which is much higher than the Sh245 per kilo currently fetched for high quality black tea.

Chesumot is now widely known to supply purple tea seedlings in the region, with recognition from the TRFK researchers. The farm has a nursery that holds more than a million seedlings.

In his next big strategy, Mr Martins hopes to soon apply for a licence for specialty tea, which will allow him to put up a cottage industry to process value added products from his farm, which he expects to greatly raise his income.

“If value addition was done in our own factories, we could earn better by exporting them (products) at higher cost. But the government is slow to uptake the advice that experts are certain will multiply the country’s economy,” says the farmer.

He points out that a commercial tea farmer has to plan ahead on means to cushion any change in market prices, as the Mombasa tea auction is influenced by global factors.

“The real forces of supply and demand will never be understood by the farmer; but the truth is these forces will always be used as a reason for less pay,” the manager states.