Over the last few weeks, I have been away traveling in West Africa, specifically within the République du Bénin and Nigeria, and I had the opportunity to interact with some of the most enterprising smallholder farmers I have come across in a long time. Now, I for my part have always been partial to small holder farmers, not only because they are truly and undeniably the lifeblood of African agriculture in all its forms, but also because I am of the opinion that they are invariably the closest to the ground and as such, are intimately connected to and aware of the subtle vagaries of the land and stock they tend. However, my trip took a fortuitous turn, and I was able to see a different face of agricultural development in West Africa; one whose aesthetic I had held serious doubts about for a long time. I was presented with the opportunity to visit what I can only describe as one of the most innovative, entrepreneurial and sustainable agricultural development centers in Africa; a place called Songhai, located in the Porto-Novo region of Benin. Because we have to finish our story about the Kenyan tea farmers, I will not go into further detail, but I promise to dedicate an entire post (or two) to what I did and saw in this wonderful place, and I promise that you too will quickly come to be under its spell.
Now….back to African models of agricultural commercialization beginning with a tale of success and great achievement. Let us consider the Kenyan tea farmer.
Kenya is one of those countries I would describe as a geo-climatic wonder. Straddling the Equator and sharing a border with Tanzania, Uganda, Sudan, Ethiopia, Somalia and the Indian Ocean, Kenya peaks at the snow- capped mountains of Mt. Kenya and dips into the Great Rift Valley buzzing with geothermal activity. In between these extremities are red plains teeming with wildlife and the sandy shores of her coastline. Nairobi, the capital city is the business and communication hub of East and Central Africa, while historic Mombasa houses her natural harbor and regional gateway – Kilindini.
Kenya is one of the oldest tea producers in Africa, with a history dating back to 1903 when a man by the name of GWL Caine planted tea seeds from India on a two acre farm. Commercial tea farming however, did not begin until 1924, and the first tea bushes that emerged from that first foray, have grown into large trees and are now an historical feature on what is now Unilever’s Mabroukie Tea Estate.
Kenya’s equatorial climate allows for perennial tea cultivation, and the primary tea growing regions endowed with tropical (volcanic) red soils, well distributed rainfall (ranging between 1200mm and 1400mm per annum), and long sunny days, total approximately 157,720 hectares.
Tea is grown on the highlands (1500m-2700m) with alluvial soils, and absolutely no application of pesticides and chemicals (fertilizers are added regularly to replenish the soil); all of which are factors that contribute to its unique quality and taste.
The Kenyan tea subsector, is considered to be one of the most famous success stories in Africa’s journey to agricultural development; in fact it is heralded as a model for smallholder commercialization. Tea production in Kenya is dominated by smallholder farmers (shambas) who produce approximately 60% of Kenya’s tea, run their own tea gardens and sell their teas to cooperatives. With production of around 345,817 metric tonnes of made tea and over 325,533 metric tonnes exported, Kenya today is the third largest producer (second only to China and India) and the leading exporter of the best black tea in the world (23%).
The next question you might ask would be, how did Kenya accomplish all this, and with a predominance of smallholder farmers no less?
Ag commercialization 101 emphasizes the idea that certain areas of intervention are crucial for commercialization to occur, and these areas to a large extent, have a common theme; reduction of transaction costs. High cost of doing business triggers a basic fear that causes people to shy away from participating in the marketplace thereby constraining commercialization. High transaction costs can derive from transportation costs, poor infrastructure, limited physical market infrastructure as well as the overarching challenge of poor institutional infrastructure (poor police protection, contract enforcement and limited essential public services); all of these (especially the last) are a severe constraint on ag commercialization.
Experiences in smallholder farmer commercialization in Sub-Saharan Africa highlight 3 key policy all related to the high cost of doing business; public support to smallholder farmers for market participation and orientation, land tenure and property rights, and policy and program coordination. Kenya succeeded in commercializing smallholder tea production, because they were able to successfully tackle all 3 of these policy items.
Tea gained global popularity as a healthy, low-cost beverage with the advent of British-owned tea plantations in India and Sri Lanka. Independence in these two countries provided an incentive for both governments to take the steps necessary to gain control of their tea industries thereby causing the British to look elsewhere for tea production. Kenya, Uganda, Tanzania and Malawi were the countries of choice, and between 1947 and 1973, tea production in Kenya and most of East and Central Africa grew by 9.6% and 9.5% per annum respectively. World exports during this time were also on the rise.
Kenya rose to surpass her contemporaries, producing 14,000 tonnes by 1960 and graduating to a whopping 200,000 tonnes by 1990. This growth however did not occur in a vacuum rather, it happened under the auspices of what has become the world’s largest smallholder tea production scheme – the Kenya Tea Development Agency Ltd (KTDA –formerly the Kenyan Tea Development Authority), which is a farmer owned organization currently managing 63 tea factory companies.
KTDA assists smallholder tea farmers in the provision of agronomic and other technical services in farming, processing and marketing of tea. KTDA also provides financial services and credit to farmers in form of inputs. Reports show that at some point nearly 7% of Kenya’s population was dependent on KTDA in some form or other for their livelihood.
But the question still remains; why did KTDA do so well? Afterall, they are a privately owned firm which like all other firms, has to contend with the prevailing business environment. But that’s just it you see, the prevailing business environment made this sort of entreprenural activity possible.
Public support and program coordination brought about the establishment of the Tea Board of Kenya in 1950 with the sole directive of regulating the tea growing and manufacturing industry in Keya. Working closely with the Ministry of Agriculture, the board’s mandate includes the licensing of tea manufacturing factories, carrying out research on tea through its technical arm – the Tea Research Foundation of Kenya, the registration of growers, buyers, brokers, packers, management agents and any other person dealing in tea, and promotion of Kenyan tea in both the local and the international markets.
Furthermore, Kenyan leaders were heavily invested in the tea industry, and as such had a personal stake in its success. Government policy was also structured in a way that discouraged nationalization in favor of private Kenyan participation in the tea export industry. Individual land titles for smallholder farmers were secure, and the government practiced sound macro-management strategy by keeping taxes on tea export low. KTDA benefited from this favorable environment, and because of its very structure benefited from economies of scale in terms of input services, packaging, transport, auction costs, etc., all of which are factors that directly impact cost of production.
KTDA was honest with its smallholder farmer members and conducted its affairs with integrity. This gave the farmers the incentive they needed to deliver their produce to KTDA , confident that they would receive a fair price for their leaf.
While all examples of smallholder commercialization in Africa are not as warm and fuzzy, Kenya’s story is one that very provides an accurate illustration of one nation’s journey to commercialization, while at the same time providing a map for how the same can be replicated elsewhere on the Continent taking into consideration country specific factors. 3 main lessons emerge here and they are that;
- Smallholder commercialization is not only possible it is necessary for improved welfare of the sector and its participants.
- Trade policy heavily impacts global competition and the success of commercialization – Kenya’s low taxes relative to higher levies on tea exports in India and Sri Lanka accelerated the growth of the export industry in Kenya.
- Finally and most importantly, smallholders are the lifeblood of the agricultural sector and given a favorable market environment, they have the capacity to respond to economic incentives, compete and gain specialized skill in their various production areas.
And that my friends concludes the first of these many paradigms of agricultural development in Africa.
Next up….”Our Communities; Ourselves.”
Sources: Embassy of the Republic of Kenya , The Tea Board of Kenya , Kenya Tea Development Agency Limited, The United Kingdom Tea Council , Majani Exquisite Kenyan Tea , The UNDP , Jaleta et al. Smallholder commercialization: Processes, determinants and impact , Poulton et al. All-Africa Review of Experiences with Commercial Agriculture Lessons from Success and Failure.