Local market proves to be more lucrative to a Fairtrade Farm

On the slopes of the picturesque Mt. Kenya, lies Iriaini tea factory. A tea factory that has been Fairtrade certified since 2006. Its current annual production stands at 15,000,000 kilogrammes.

On average its small-scale farmers, who are co-owners of the factory, own 0.5 acres of land and earn 150 KS (less than 2USD) per day. The company decided to set up different projects to improve the livelihoods of its farmers. One was to add value at the source.

Six years ago, the Factory was selling 5% of their production under Fairtrade terms, which has drastically reduced to the current 2%. A bulk of their sales has been predominantly from the European markets including brands like Marks and Spencer in the UK, which attribute their source to Iriaini.

“We started a tea value addition project in 2007 when we first opened a local shop to sell packed tea to the lotea bagscal market, says Matthias Ithiga, the Factory Unit Manager. “Previously, packed tea was sold to the tea growers on the Factory door sales model.”
Realising that Kenya is predominately a tea drinking nation, with most households consuming an average of 1kg a month, they realised there is a ready market to be tapped.

Iriaini found the perfect partner in UK retailer Marks & Spencer. During a visit to the tea farm to observe the impact of Fairtrade on farmers, the retailer was impressed with the organisation’s income diversification project, funded by the Fairtrade premium. M&S proposed to help Iriaini to become the first Kenyan tea factory that packed at the source. DFID, the UK development agency, agreed to fund the project.

Marks & Spencer provided technical and commercial support from its team of experts to ensure the Fairtrade farmers developed the skills needed to understand how to pack tea. A teabag packing line was established at Iriaini and M&S has been working with the factory to ensure the tea packing room was brought up to international standards.

CarAttempts were made to penetrate the neighbouring markets especially in the non-tea growing zones, which are as far as 200kilometers away from Iriaini. This proved to be quite a challenge since they lacked proper infrastructure to serve the market. Notwithstanding, the managing agent, KTDA was not able to invest into the project.

They then shared the tea sales project proposal to the Fairtrade Committee. This was embraced and they agreed that the Fairtrade Premium Committee on behalf of the factory would drive the project.

The Fairtrade committee agreed to inject capital that would be used to buy the vehicle to distribute the products to various outlets. They also agreed to hire a sales person and cover the maintenance costs of the vehicle until a time when the project would sustain itself. The eventual profits would then have 3% ploughed back to the Fairtrade Premium kitty.

“I must say we are overwhelmed by the returns over a short span,” says Matthias. “The initiative has driven the total sales under Fairtrade to 6% whereby 3% is netted from the international markets while another 3% is achieved from the local market.”

As they look towards maintaining steady income streams, they are looking forward to intensifying their distribution plan by acquiring one more van and an additional sales person. They want to stock in major supermarkets in the Mount Kenya region.
“With the burgeoning local market, the dream will become a reality” commented Nyagoy Nyong’o the Executive Director of Fairtrade Africa.