Government should end storm threatening to kill tea industry

With incessant resistance to mechanisation of farms and never ending agitation by labourers for higher wages on the face of thinning revenues, the most critical question facing Kenya’s economy is how soon will the tea industry’s growth model run out of steam?

More important than the actual timing, however, is the nature and repercussions of the current crisis in which the industry finds itself. The catastrophe encapsulates Kenya’s struggle to realise its agricultural potential.

It is a story of powerful unions and political inertia – a stark example of self-destruction. Connected to these economic and social contradictions, that include a huge number of unskilled labourers demanding exorbitant pay and luxurious lifestyles that government public service offerings can’t sustain, is a widening opposition to mechanisation of farms by the workers’ unions, underscoring the unsustainability of the current path of production in the tea sector.

It started sometime in 2006 after tea producers were allowed by the government to import tea-plucking machines on a trial basis against the wishes of labourers who pick tea leaves and throw them over their shoulder into back packs.

It is estimated that large tea estates directly employ about 80,000 workers while another 1.5 million rely on them indirectly, and after realising the machines are effective and contribute in cutting production costs, tea estates changed their preference to plucking machines.

Tea pickers felt that their jobs were threatened, precipitating the now endless industrial action and demands for higher wages that are captured on collective bargain agreements that the workers’ union greedily revises on an annual basis.

A strike by the tea pickers in October last year rekindled large-scale tea growers’ plans to replace humans with plucking machines, threatening jobs in an economy that’s struggling to create employment.

The strike, which started on October 17 last year was declared illegal by the Labour court, but the workers persisted.

Negotiations held between their union and Kenya Tea Growers’ Association (KTGA) yielded no fruit, with the former demanding that a 2014/2015 CBA in which the workers demanded a 75 per cent wage increment be implemented.

The union also wanted KTGA to start negotiations for the 2016/2017 CBA.

Companies including Unilever Tea Kenya, which produces the Lipton brand, Williamson Tea Kenya and James Finlay are estimated to have lost more than Sh400 million of output during the workers’ strike that lasted three weeks, according to the KTGA.

RUN THEIR BUSINESSES

Yet, there are other compelling statistics. The break-even price per kilogramme of tea is $1.80 (Sh185) according to the East African Tea Trade Association, which conducts the world’s biggest black-tea auction at the Mombasa port.

The average sale of the same this week was $2.7 (Sh278). Experts estimate that if the pressure continues, in 15 years there will be no tea operator in Kenya.

But the damage is not limited to big companies. The status quo is threatening to vanquish smallholder farmers too.

In June 2016, tea farmers in Nandi County vowed not to implement a 30 per cent salary increment awarded to tea pickers by the Employment and Labour Relation court.

The over 11,000 farmers threatened to uproot their tea bushes, arguing the hike in salaries would drive up operating costs.

The court had directed that workers allied to the Kenya Plantation and Agricultural Workers Union and KTGA get the pay rise as part of a collective bargaining agreement.

The farmers argued that out of the cash they receive from selling tea, close to 75 per cent goes towards paying workers.

Though workers have a fundamental right to strike and protest, the truth of the matter is that large tea estates are privately owned and the owners have the right to decide how they want to run their business.

By deciding to use plucking machines instead of human labour, the large-scale tea estates were looking at efficiency and the need to reduce production costs to compete with tea produced in other parts of the globe.

In order to avoid looming disaster, the current economic consensus suggests that investors in the tea industry, including large industrial producers, farmers and tea pickers, need to rebalance their shares of investment and consumption and move away from the current brand of agitation that threatens to stifle production.

There is need to move away from an eco-system that is dangerously reliant on CBAs that are renegotiated on a yearly basis, characterised by demands for extreme wage hikes, frequent industrial action and opposition to mechanisation.

It is also important to note that mechanisation is a key ingredient of industrial revolution, which Kenya needs in order to achieve Vision 2030.

Agriculture accounts for a quarter of Kenya’s Gross Domestic Product and that Kenya’s status as the world’s biggest exporter of black tea needs to be safeguarded.

The writer comments on economic and social issues; [email protected]