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How tea multinationals have shaped industry since 1920s

Saturday March 21 2020

Tea pickers pick tea leaves in a farm in Nyamira County.

Tea pickers pick leaves of the crop in a farm in Nyamira County. Today, although the crop occupies the first position as the country’s foreign exchange earner, the International Tea Authority, the multinational tea companies together with highly placed Africans whom they have co-opted into the tea industry as producers and managers, continue to protect and further their own interests and, only incidentally, those of the country and its citizens. PHOTO | FILE | NATION MEDIA GROUP 

ODHIAMBO NDEGE
By ODHIAMBO NDEGE
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Tea, which is indigenous to China, was first grown in Limuru in 1903. Initially, its production was in small quantities and European and Indian tea drinkers relied on imports from India and Sri Lanka.

During subsequent years, internal demand for tea increased as a result of urbanisation and exposure of Kenya’s rural population to new tastes.

Its prospects as a profitable crop from the early 1920s influenced many European settlers and international companies to undertake its production.

Africans were allowed to cultivate very restricted quantities of tea from the 1950s. The international firms that engaged in large-scale tea production included Twinning Tea Company, A. Bauman and Company, Jardine and Mathieson, Leptons, Buret and Jamji Estates, Nandi Tea Estates, Brooke Bond (East Africa) and James Finlay Company.

Before the outbreak of WWI in 1914, Brooke Bond engaged in tea blending in India and Sri Lanka. In 1914, Tom Rutter, who was in charge of Brooke Bond in Calcutta, India, travelled to Kenya on a trophy-hunting safari. He realised that the country was greatly ideal for tea growing.

In 1916, Brooke Bond appointed an agent in Nairobi to sell its brand in the country before opening its office in Mombasa in 1922 to manage tea imports. In 1924, it bought 1,000 acres in Limuru to grow tea.

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It soon moved to Kericho where it established its first major Tea Factory in Kerenga in 1927. In 1946, it also bought Buret and Jamji Tea Companies.

Later in the 1950s, it added to its enterprise the production and sale of cinchona, the raw material from which the antimalarial drug, quinine is manufactured.

In 1958, it owned about 7,410 acres of tea in Kenya and was the largest tea producer in the country and the world. In 1970s, Brooke Bond greatly expanded its activities beyond the tea industry. In 2004, after its merger with Liebig, the company changed its name to Unilever Tea, Kenya Ltd.

Finlay was the oldest company among tea producers. It was established in Scotland in 1760. Initially, it manufactured textiles before it acquired large tea estates in Asia and became, by the 1920s, the largest tea growers in the world.

ESTABLISHED VIRTUAL MONOPOLY

In 1925, it bought 20,000 acres of land in Kericho and registered the African Highlands Produce Company to run its tea estate.

The company planted tea on over 5,000 acres for a start. Today, Finlay is also involved in the lucrative large-scale flower farming around Naivasha.

Brooke Bond and Finlay’s positions as the dominant British-based multinationals with the largest tea interests in Asia and Latin America placed them in a rather contradictory position regarding the development of tea production in Kenya.

Locally, they either bought or undercut the smaller companies and forced them out of business. They also competed between themselves.

As a consequence, during the depression in 1929-39, Brooke Bond and Finlay established virtual monopoly over the tea industry in Kenya. They controlled all key stages of production, marketing and distribution.

Being the most influential members of the International Tea Corporation, the companies made critical decisions regarding the quantities of tea to be produced in the country. They also fixed tea prices in their favour.

For instance, when the Great Depression (1929-1939), led to a sharp drop in tea prices, Brooke Bond and Finlay protected their interests in Asia and Latin America, respectively, through pushing for high import duties on Kenya tea.

This made Kenyan tea exports more expensive.

The two companies further benefited from two five-year tea restriction schemes, the first in 1934 and another one in 1938.

They influenced schemes through their membership of the International Tea Agreement. The restrictions were meant to prevent large supplies of tea into the world market as this would imperil British tea growing interests.

After the outbreak of the Second World War in 1939, the British government arranged for bulk purchases of tea and other products that were essential to her efforts in the war.

In 1940, this arrangement allowed Kenya, Uganda and Tanganyika to export 5 per cent of all tea to Britain. Once more, this arrangement benefited Booke Bond and Finlay much more than all the other tea firms in the region. Bulk purchases of tea were arranged again in 1942 and operated until 1954.

OWNED BY INTERNATIONAL COMPANIES

As a consequence of these production and market control measures, tea exports in Kenya remained almost static between 1937 and 1952. During the period, quantities of tea exports were hardly above 4,200 metric tonnes.

The worst years were 1948 and 1949 when tea exports from Kenya declined to about 2,697 metric tonnes. The export figures increased from 4,917 metric tonnes in 1954 to 13,452 metric tonnes in 1962.

This was because Brooke Bond and Finlay developed higher-yielding tea varieties and processing techniques, the former at its Tea Research Institute near Kericho Town.

This increase can also be attributed to the entry of Africans into tea growing, mostly as smallholders in the 1950s in Kiambu, Karatina, Nyeri, Kericho and Kisii. As in the case of coffee and pyrethrum, African participation in tea growing was pushed by nationalist pressure, which led to the Swynnerton Plan of 1954. This plan introduced land consolidation, first in Central Kenya before its extension to other areas.

The Million Acre Scheme and others of the early 1960s also contributed to tea production and exports. Established in 1964, the Kenya Tea Development Authority increased smallholder area under tea from 10,868 acres in 1965 to 135,082 acres in 1982. This was almost double the area owned by the international companies.

Meanwhile, new organisations were established to manage the tea industry. One was the Tea Board in the 1950s. It issued licences to prospective growers and inspected land to determine suitability for tea growing, among other functions.

Today, although tea occupies the first position as the country’s foreign exchange earner, the International Tea Authority, the multinational tea companies together with highly placed Africans whom they have co-opted into the tea industry as producers and managers, continue to protect and further their own interests and, only incidentally, those of the country and its citizens.

Prof Ndege teaches at Moi University, [email protected]