State should act to end storm brewing in the country’s tea sector

With incessant industrial action, resistance to mechanisation of farms, and never-ending agitation by labourers for higher wages in the face of thinning revenues, the timing for when the tea industry’s growth model will run out of steam is probably the most critical question facing Kenya’s economy. More important than the actual timing, however, is the nature and repercussions of the current crisis in which the industry finds itself.

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 the public service offerings cannot sustain is widening opposition to mechanisation of farms by workers’ unions, underscoring the unsustainability of the current path of production in the tea sector.

The problems started in 2006, when producers were allowed to import tea plucking machines on a trial basis against the wishes of the tea pickers. It is estimated that large tea estates directly employ about 80,000 workers while another 1.5 million rely on them indirectly. When they realised that the machines were more effective and contributed to cutting production costs, tea estates changed their preference to the machines.

BARGAINING AGREEMENTS

Tea pickers felt that their jobs were threatened, precipitating the now endless industrial action and demands for higher wages that are captured in collective bargaining agreements (CBAs) that the workers’ union revise every year. 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 is struggling to create employment.

The strike was declared illegal by the Labour Court, but the workers persisted. Negotiations held between their union and the Kenya Tea Growers’ Association (KTGA) yielded no results, with the former demanding that a 2014/2015 CBA that had 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, Williamson Tea Kenya, and James Finlay lost more than Sh400 million worth of output during the workers’ strike that lasted three weeks, according to the KTGA. 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 salary increases are creating a social disparity problem with tea being plucked at above Sh15 a kilogramme by unionised workers and seven shillings a kilogramme in smallholder farms. The Government’s intention to include tea, coffee, sisal, and pineapple in the Common Agricultural Wage Order, when implemented, will stabilise the situation and enable industrialisation.

MODERNIZATION

The more than 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 (KPAWU) 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 to paying workers.

Though workers have a fundamental right to strike and protest, the truth of the matter is that large tea estates, like any business, must remain sustainable if employment is to be guaranteed. By testing mechanisation alongside manual 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 situation suggests that investors in the tea industry, including large industrial producers, farmers, and tea pickers, need to re-balance their share of investment and consumption-and move away from the current brand of agitation that threatens to stifle production.

There is a 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 high wages, frequent industrial action, and opposition to efforts to inject efficiency in the system, including 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 the country's status as the world’s biggest exporter of black tea needs to be collectively safeguarded.