How Tea Farming Changed my Life

By BENUEL BOSIRE

CHAI Keeping you up-to-date with the latest news from Kenya Tea Development Agency (Holdings) Ltd

A PUBLICATION OF KTDA HOLDINGS

Mrs. Elizabeth Wanjiku Kagondu plucks tea in her farm - PHOTO/KTDA

ISSUE 6 / JANUARY - JUNE , 2016

Bulletin

email: editor@ktdateas.com website: www.ktdateas.com; facebook.com/ktdateas

@KTDATea Global Leader in Quality Teas

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“God be my guide. I am confident you won’t forsake me,” those were the words Mrs. Elizabeth Wanjiku Kagondu said when she called it quits. Under the blazing sun of March 1988, the then 33-year-old handed her boss the resignation letter. Her boss was shocked by her decision. Elizabeth was an excellent worker, a good listener, keen on details and quite organized. She was no doubt a professional woman.

Their conversation lasted a few minutes and soon, she was out of the office of the

Ministry of Agriculture, Runyenjes branch, clutching her handbag under her left shoul-der.

Those days there were fewer matatus than we have today, Mrs. Kagondu recalls. “I did not want to hang around Runyenjes town after my resignation. It was a waste of time or so, I thought. I bundled myself into a packed matatu and alighted at Rukuriri township,” she narrates.

Life at home was not easy. It was dull and dragging. Days, weeks, months elapsed with-

out Mrs. Kagondu accomplishing anything significant.

She was stuck as she did not have enough capital to start commercial farming. She, however, had one precious capital - land. With her little savings, she threw herself into tea farming.

With the support of her husband Japheth Kagondu, Mrs. Kagondu ploughed part of their eight-hectare piece of land, and planted 1,000 bushes of tea. “Before we planted tea, we marked holes in lines at a spacing of 4ft x 2.5ft, under the guidance of KTDA person-nel,” Elizabeth recalls.

They delivered their first batch of green leaf to Rukuriri tea factory. Mrs. Kagondu chose tea because it does not require much spraying like coffee. Gradually, they expanded the area under tea to accomodate 8,000 tea bushes. On average, she plucks between 1,800 and 2,000 kilos of green leaf monthly. Today, she does not regret having resigned from a white collar job to start tea farming. The earn-ings she fetches from tea has enabled her and her husband to build a modern house, to educate their three children and to transform their economic lifestyles.

Their house is well furnished and admired by many... CONT’D PG 2

“Initially, I planted 1,000 bushes of tea...gradually, I

increased the number to 8,000” - Mrs. Kagondu

Brokers sell tea at the Mombasa Tea Auction...Story page 5 >>>

Tea farmers set up small hydro power projects to supply power to tea factories at reduced costs...Story page 4 >>>

Tea farmer in Embu finds great success in tea farming after quitting low paying job

2 | Chai Bulletin

Government Scraps ad valorem Tax

The Government of Kenya has lifted the ad valorem tax charged on tea to enable tea farmers earn better

returns. The announcement came during the

reading of the 2016/17 budget estimates, presented by National Treasury Cabinet Secretary, Mr Henry Rotich. This is a great relief for tea farmers who have had to shoulder the tax since 2010 when it was introduced through the Tea Amendment Bill (No.2).

The tax charged at the point of export made Kenyan teas more expensive compared to teas from the East African regions. The

scrapping of the 1 percent ad valorem tax means that all teas sold at the Mombasa Tea Auction will henceforth have a fair playing ground for competition.

Tea remains the mainstay of Kenya’s agricultural economy and to keep it afloat, the state has pledged to continue helping stakeholders to tackle the challenges befalling the tea industry. In 2015, tea earned Kenya Sh125.25 billion ($1.23 billion) from exports, placing tea as the number one foreign exchange earner. Kenya is the world’s leading exporter of black tea.

EDITOR’S NOTE

Welcome to the 6th edition of Chai Bulletin. In this edition, we shed light on tea production and tea prices at the global markets. We also bring you other latest developments at the KTDA Group.

In this second half of 2015/2016 Financial Year, tea prices have dropped at the Mombasa Tea Auction due to high production of the commodity. The high production has been as a result of favourable climatic conditions in tea growing zones.

SMALL HYDROPOWERConstruction for the small hydropower

stations, which the tea factories have invested in, are gradually progressing. Gura and Chania are at advanced stages of construction. Other power projects include Lower Nyamindi, South Mara, Iraru, North Mathioya, Nyambunde, Kipsonoi and Chemosit. The projects are set to reduce the high cost of energy incurred by tea factory companies in the long run.

KTDA Foundation continues to support tea farming communities by sponsoring needy and bright pupils through payment of their school fees. The Foundation has so far sponsored over 330 students who are in different classes in different high schools across the country.

We would like to thank our tea farmers for improving on quality, making our tea the best in the world. We would like to urge them to maintain this trend and place KTDA in the number one position for quality teas in the world.

NDIGA KITHAE Group Head, Corporate Affairs

January - June, 2016

Tea Farming Helps Mrs Kagondu Set Up Other Enterprises Besides Tea

Content Editor: Benuel Bosire Revise Editor: Egadwa Mudoga

FROM PG1...Her tea farm is lush and evenly levelled. It is this farm that has been the secret behind her success and that of her husband.

“I do not do much of the plucking myself these days. I hire people to do it for me,” she says. Clearly, she is no longer the junior em-ployee she once was at the Ministry of Agri-culture. She is now a different person, a boss and an employer. Even as she walks around her expansive compound, one can sense an air of satisfaction all around her. Despite her

success, she is a simple and God fear-ing woman. “All that I have achieved today is through the plan of God,” she says humbly. She attends ACK church, every Sunday.

Besides tea farming, Mrs. Kagondu keeps dairy cows. She and her husband sell the milk to Kenya Co-operative Creameries, Runyenjes, and the sur-rounding community. They also keep goats, poultry and fish.

Mrs. Kagondu in one of her cow sheds. These are part of her 20 dairy cows that produce more than 100 litres of milk daily.

Global Leader in Quality Teas

Directors of KTDA managed tea factory companies during a corporate governance training in Nairobi on February 10, 2016. Good corporate governance is key to effective management of any institution.

Kenya Tea Development Agency Holdings has revamped its social media presence to enhance

communication with techno-savvy tea farmers and other stakeholders.

“The relaunch of our Facebook and Twitter platforms has opened up our digital space, providing an additional channel to engage with our audiences,” Ndiga Kithae, Group Head, Corporate Affairs, said.

ACCESS PAGESTea farmers can now access KTDA

Facebook page at www.facebook.com/ktdateas and Twitter on @KTDATea.

Kithae appealed to staff, farmers and other stakeholders to visit KTDA social me-dia pages. He added that tea farmers can also engage on tea matters via this platform. “Social media started gaining momentum in 2007 and we now think of it as one of the several channels of strategic communica-tion,” Kithae added.

A section of KTDA staff undergoes training on Systems Application and Products (SAP). SAP is a business system expected to improve the efficiency and effectiveness of company operations, including payment to farmers.

KTDA Revamps Social Media

January - June, 2016 Chai Bulletin | 3

January - June, 20164 | Chai Bulletin

KTPC SMALL HYDROPOWER PROJECTS KTDA Power Company (KTPC), a subsidiary of KTDA-Holdings, in conjunction with KTDA managed tea factories and regional power companies have invested in small hydropower projects to reduce the cost of energy which accounts for 30% of the total factory cost of production. KTPC is overseeing the construction of power plants in Gura, Chania, Iraru, North Mathioya, Lower Nyamindi, Nyambunde and South Mara. Other plants in the pipeline include: Kipsonoi, Che-mosit, Rupingazi, Tindinyo, Kiringa, Ura, Kathita, Nyamasege and Kiptiget.

- Iraru Small Hydropower Project- Regional Power Company: Greater Meru- County: Meru- Potential MW: 1.50- Current Status: Contractors on site

- North Mathioya Hydropower Power Project- Regional Power Company: Metumi- County:Muranga- Potential MW: 5.60- Current Status: Contractors on site

- Lower Nyamindi Hydropower Power Project- Regional Power Company: Kirinyaga- County: Kirinyaga- Potential MW: 1.8- Current Status: Contractors on site

- Nyambunde Small Hydropower Project- Regional Power Company: Nyakwana- County: Kisii- Potential MW: 2.00- Current Status: Contractors on site

- South Mara Small Hydropower Project- Regional Power Company: Greater - Meru - County: Tharaka Nithi- Potential MW: 2.0- Current Status: Contractors on site

- Chania Small Hydropower Project- Regional Power Company: Chania- County: Kiambu- Potential MW: 1.00- Current Status: To be commisioned soon

- Kipsonoi Small Hydropower Project- Regional Power Company: Settet- County: Bomet; Potential MW: 3.6- Construction to start soon- Factories to connect: Kapkoros, Mogogosiek, Kapset, Kapkatet

- Rupingazi Small Hydropower Project- Regional Power Company: Thuci- County: Embu; Potential MW: 1.8- Construction to start soon - Factories to connect: Mungania, Rukuririri and Kathangariri

- Chemosit Small Hydropower Project- Regional Power Company: Settet- County: Kericho; Potential MW: 2.5- Construction to start soon- Factories to connect: Momul, Chelal, Tegat and Litein

- Gura Small Hydropower Project- Regional Power Company: Gura- County: Nyeri- Potential MW: 5.8- Current Status: To be commissioned soon

Factories to be connected:- Chinga, Iriaini, Gitugi, and Gathuthi

Factories to be connected:- Kionyo

Factories to be connected:- Githambo, - Kanyenyaini, - Gatunguru and Kiru

Factories to connect:- Kimunye and Thumaita

Factories to be connected:- Nyankoba- Kiamokama- Ogembo - Itumbe

Factories to be connected:- Weru

Factories to be connected:- Mataara and Ngere

Note: Other tea factories, not in the illustration, will be connected once the projects are complete and running.

By BENUEL BOSIRE

Global Leader in Quality Teas

The sale of tea at the Mombasa Tea Auction is no secret. Like other tea auctions elsewhere in the

world, the Mombasa auction receives teas from different countries across the East African region which are sold alongside each other.

Tea brokers prepare a selling catalogue, give specific information on every grade and taste teas, reporting observations and recommendations.

The auction is held in public and is an ‘open cry’ system, where buyers compete for tea by bidding against each other in an auction room. Auctions are held twice a

week, on Mondays and Tuesdays. In all auctions, teas are sold in grades,

under factory names. Before the auction takes place, buyers are provided with sam-ples so that they already know the quality of particular teas they are interested in.

Each lot of tea is sold (“knocked”) to the highest bidder, as long as the price has reached a minimum level set by the broker based on the prevailing market conditions.The auction follows the normal pattern of demand and supply: prices rise when there is a strong demand and fall when there is a weak demand.

Between July 2015 and February 2016, KTDA produced a total of 815 million kilos

of tea compared to 732.6 million kilos pro-duced the same period, last year. This rep-resents a 10 percent increase in tea produc-tion. Starting August 2015, the volume of tea produced by the smallholder tea farmers has been on an upward trend compared to the previous year, with January 2016 pro-duction recording 133.3 million kilos from 106.4 million kilos recorded in 2014/15 Fi-nancial Year. The 20 percent increase in tea production is attributed to the El Niño rains experienced last year and early this year.

TEA PRODUCTIONFollowing the high production, the aver-

age price of KTDA tea in April, 2016 fell to lows of Ksh230 (USD2.3) per kilo of pro-cessed tea compared to Ksh260 (USD2.6) same period of time, last year.

To expand its market share, KTDA is venturing into new markets such as Iran, after the UN lifted trade sanctions against the country in February this year, and other tea markets such as Kazakhstan among oth-ers.

As the strategy to fast-track auction op-erations, East African Tea Trade Association (EATTA), the association that handles tea trade in East Africa, is set to introduce elec-tronic auction soon. The organisation handles over 400 million kg of tea yearly and posts weekly tea prices on its website, www.eatta.com.

The Mombasa Tea Auction. Tea prices have fallen due to high production of tea.

Inside the World'S Largest Black Tea Auction, Mombasa

PARTNERSHIP SIGNED...KTDA (H) CEO, Lerionka Tiampati (left) and Tania Lozansky, International Finance Corporation Global Head, Manufacturing Agribusiness and Services Advisory, sign a KES420 million partnership at a Nairobi Hotel, on April 14, 2016. Behind them, is H.E Tatsushi Terada, Japan Ambassador to the Republic of Kenya and Emi Kitasako Associate Investment Officer at IFC. The partnership is aimed at improving yields and income for tea farmers in Kenya.

January - June, 2016 Chai Bulletin | 5

FFS Transforms Lives of Smallholder Tea Farmers

Hundreds of thousands of tea farmers in tea growing zones have been empowered through

Farmer Field Schools (FFS) to improve their economic well-being.

Tea farmers, under FFS, acquire entrepreneurial skills that can enable them venture into other enterprises, besides tea farming, to boost their earnings.

“FFS has proved to be a game-changer for smallholder tea farmers as they can now leverage on skills acquired from the training to explore other business enterprises. The programme has enabled tea farmers to spread business risks across several enterprises. Additionally, FFS has boosted tea production,” Peter Mbadi, Senior Agricultural Manager Agricultural Services at KTDA (MS) said.

EMPOWER FARMERSThe FFS programme aims at empowering

tea farming communities to build sustainable agricultural farming systems that ultimately improve their livelihood. The programme is co-sponsored by KTDA (MS), Sustainable Trade Initiative (IDH) and Unilever.

Started as a pilot project in 2006, the programme has grown in leaps and bounds from 24 FFS to over 3,400 today. In total, the programme has seen over 100,000 smallholder tea farmers train in sustainable agriculture, across tea growing zones. The trained farmers have, in turn, informally trained others, creating a ripple effect of knowledge sharing. The pilot project expires in June and will continue under individual factories.

KANGAITA'S 50-YEAR CELEBRATIONS.... (From left) Johnson Gachua, Ceasar Thairu of Union Tea Brokers, Joseph Gachingiri (HSC), Chief Officer, Department of Agriculture & Livestock, Kirinyaga County, Nicasios Muriithi, Director Kangaita Tea Factory, Alfred Njagi, KTDA (MS), General Manager - Operations, David Githinji, Kangaita Factory Chairman and Jeffithah Karua, KTDA Zone 5 Board Member cut cake to mark the Kangaita Tea Factory 50 year anniversary celebrations on February 22, 2016.

BOOKS FOR THE COMMUNITY...KTDA (H) Chairman, Peter Kanyago (right), watches as Othaya MP Hon. Mary Wambui signs a visitor's book after she officially opened the Gitugi Community Library in Nyeri County on April 22, 2016. Looking on are Gitugi Tea Factory Board Chairman Peter Mwangi and Factory Unit Manager, Ms. Virginia Chege. The library is aimed at promoting a reading culture in the community.

Smallholder tea farmers during an agronomic training under the Farmers Field School programme.

Global Leader in Quality Teas

January - June, 2016 6 | Chai Bulletin

MAKING A POINT... Philip Ng'etich (second left), KTDA (H) Vice Chairman Board and

Member Zone 8, with Regional Manager, Guyo Godana, during Tegat Tea Factory Annual

General Meeting (AGM) at on February 25 2016. Godana explains a point to tea growers -

Henry Benga and Stella Chebet- during the event.

WATER FOR LIFE...Water tanks for harvesting rain water being offloaded at Balek Secondary School, Bomet County, on April 8 2016. The tanks were donated by the KTDA Foundation in conjunction with Taylors of Harrogate. A total 62 tanks were issued to schools and health centres in tea growing zones.

JOB SHADOWING....Eric Cheruiyot (centre) of Nairobi School, one of the students

sponsored by the KTDA Foundation and his classmate receive management tips

from Ndiga Kithae, KTDA (H) Group Head, Corporate Affairs. The KTDA Foundation

has sponsored over 330 students from tea growing zones. ENERGY GENERATION....Water intake point at Gura small hydropower plant in

Nyeri county. The plant is projected to generate 5.8 MW of power. Smallholder tea

farmers, through Regional Power Companies, have invested in hydropower proj-

ects to reduce the cost of energy, which accounts for 30% of factory production

TASTING THE REAL QUALITY...Clare Welton (right) of Harrods, a leading KTDA

tea buyer from the UK, samples the quality of tea when she visited KTDA tea

tasting room. She was accompanied by Peter Kimanga (second right) of Global

Tea Company, Mombasa. KTDA (MS) acting General Manager (Sales & Marketing),

John Bett and KTDA Business Development & Marketing Manager, Lucy Nyakiore

guide them.

January - June, 2016 Chai Bulletin | 7

LOOKING FOR NEW MARKETS...Peter Kanyago (third left), Chairman, KTDA (H)

with Lerionka Tiampati, KTDA (H) Chief Executive Officer (second right) tour the

Shahsavand packing factory in Iran. The team was in Iran for marketing activities,

following the lifting of trade sanctions against the country.

Pictorial

Global Leader in Quality Teas

Chai Bulletin | 7

January - June, 2016

Farmers who have taken Kinga Ya Mkulima cover through Majani Insurance can now be treated in

any hospital in the country, the company’s General Manager, Ms. Mumbi Gitonga, has said.

Ms. Mumbi said that Majani Insurance Brokers in partnership with Britam has entered into a bilateral agreement with major hospitals to ensure that its clients get in-patient medical services. The choice of hospital will majorly depend on the cover subscribed by the insured. The move is part of the company’s strategy to more product choices to its clients.

Speaking in Nairobi, Ms. Gitonga said that farmers who have taken the policy get inpatient services including maternity and surgery services in private, public and mis-sion hospitals. Also, the policy offers last-expense benefits for deceased policy takers.

The funeral expense is paid within 48 hours of the claimant’s submission of re-quired documents. Such funds help in offsetting funeral expenses, which has been a major challenge to most families.

“Farmers who have taken the Kinga Ya Mkulima medical policy can get medical care by use of their membership card. The card offers them credit facility in listed hos-pitals,” Ms. Mumbi said.

She added that Kinga Ya Mkulima is a family medical and life cover for insured persons and their dependents (Spouse and Children below 18 years). Children above 18 are eligible for the cover if they are school-ing but this provision goes only upto the age of 24.

Ms. Mumbi called upon farmers to sign up for Kinga Ya Mkulima to benefit from medical care security that comes with the cover. “We have different cover options to suit every individuals, depending on their financial status. Our products range from as low as Kshs. 55/- to Kshs. 360/= per person per month with commensurate hospitaliza-tion and last expense benefits,” Ms. Mumbi said.

All major hospitals within tea catchment areas are in the panel of providers. Kenyat-ta Hospital, which is the Kenya’s main refer-

ral hospitals, is also in the panel. Farmers are not restricted to use the facilities within their localities but can seek medical facili-ties from hospitals of choice. However, the policy does not cover drug abuse and alco-hol-related treatment.

Kinga Ya Mkulima cover was initiated in 2007 with limited medical cover but has over time improved to offer more benefits to policy takers. In 2011, the policy was upgraded to include children, surgery and maternal care. Currently, the scheme has gained popularity and supports more than 600,000 farmers. Entry eligibility is between 18 years to 75 years, but those who attain 75 years while under the policy are retained.

Majani Insurance Brokers is a leading independent insurance broker established in 1976 as an insurance agency, and later converted to an insurance broker due to growing demand for its products. The com-pany is now recognised as one of the major players in the local market.

Kinga Ya Mkulima is a wholesome family medical and life cover. The product caters for inpatient medical, surgery and last ex-pense benefit.

A wholesome hybrid family medical package for the insured and their de-pendants.A daily hospitalization benefit (rebate) for each day spend in hospital. The maximum number of hospitalization days per year is 30 per member. The cover is available from KES1000.An annual medical surgery benefit of up to 10 times the daily hospitalization benefit per insured.Last expense benefit of up to 10 times the daily hospitalization benefit per insured.Maternity covers for the insured or their spouse.

Pauline Mwangi, Majani Insurance Brokers Sales and Business Development Manager, presents a cheque worth Ksh100, 000 to a tea farmer, who had taken Kinga ya Mkulima package to cover his medical bills. Farmers under Kinga ya Mkulima cover can now receive treatment in a number of hospital in tea growing zones.

Features of Kinga ya Mkulima

Farmers Enjoy Expanded Hospital Choice With Kinga ya Mkulima

For More Information on Kinga Ya Mkulima, Call: 0722 360942/3 or visit www.majanin-sure.com/

Chai Bulletin | 8

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