Building Tea Back Better through Sustainable Business Models

Building Tea Back Better through Sustainable Business Models

“In order to change an existing paradigm you do not struggle to try and change the problematic model. You create a new model and make the old one obsolete.” Could these words from the American inventor and thinker, Buckminster R. Fuller, be applied to the tea industry?

On June 16th, THIRST hosted a virtual roundtable meeting on the theme of building tea back better after the coronavirus pandemic. We looked at three themes, Social Dialogue Working for Women, Sustainable Business Models and Sustainable Purchasing Practices. The experience of the speakers in each of these areas provided thought-provoking examples of how things can be done differently. They may not be perfect but – for the almost 100 people around the world who joined the roundtable – they provided inspiration and information about how some of the tea industry’s endemic problems could be tackled.

This is the second in a series of blogs reflecting on each of those themes. The first in the series was on how social dialogue can work better for women tea workers. This time we look at Sustainable Business Models. 

“In order to change an existing paradigm you do not struggle to try and change the problematic model. You create a new model and make the old one obsolete.” Could these words from the American inventor and thinker, Buckminster R. Fuller, be applied to the tea industry?

The British colonial model for growing, processing and trading tea has remained more or less unchanged since its beginnings – but is starting to show signs of wear and tear – its fault-lines more evident in the glare of COVID-19. Workers – especially women – report struggling to survive at current wage levels. There are persistent reports of benefits such as housing, healthcare, sanitation and education being well below acceptable standards. With rising costs, stagnant prices and falling global demand – the tea industry feels it is in crisis. And COVID-19 is pushing it further towards the edge…

So, do we need to – and can we – change this paradigm? Or do we need to – can we – make it obsolete? And will COVID-19 give the industry the impetus to do so?

The mindset change model…

Ambootia is a Darjeeling and Assam tea company that operates within the traditional model, but has adopted Fairtrade, organic and biodynamic principles. When CEO, Indroneel Goho, first joined Ambootia – unusually for the tea industry coming in from a different sector – he was surprised to see that production methods had not changed for 100 years.  He has since brought in a number of operational changes such as automation – but also believes in direct consultation with workers (who he refers to as colleagues) and investment in their education; including a programme of audio visual training.

This is all part of what Indroneel sees as the need for “a mindset change” and for the industry to leave its colonial mindset behind. He said businesses need to prioritise social issues first and then make profits – and then look at sharing profits with people. With 65,000 people living in Ambootia’s tea gardens, “the social concept is very important” he said, going on to explain that “4% of the profits of the company are ploughed back for development of the soil, social upliftment and environment in our tea estates.”

This has been made possible through support from like-minded foreign investors, who also ensured that Ambootia workers were paid and received PPE throughout the lockdown period, when many other estates failed to pay their workers.

But could the mindset change go even further?

The co-operative model…

Binita Rai and Vickey Dubey, members of the cooperative that runs the Mineral Springs tea estate in Darjeeling, described a radically different model. When the Mineral Springs tea estate closed on the departure of its British owners in the 1950s – its workers went through a period of near destitution. But, with initial support from NGO DLR Prerna and Tea Promoters India, it is now an independently thriving co-operative spanning eleven hamlets, each with five democratically elected representatives – of which it is mandatory that at least one should be a woman.

The cooperative has diversified beyond tea and now also grows spices and other products, and every household is involved in agroforestry and animal husbandry. This not only makes for a more secure income for its members, but is also better for the environment; creating biodiversity in place of the monoculture of traditional tea plantations.

The cooperative is organised into committees looking at issues such as organic cultivation, the Fairtrade premium, tea quality and transportation and women’s issues. The collectors of each hamlet decide how the money earned from green tea leaf sales is spent. They each have their own income generation initiatives and can also access Mineral Springs’ organic farming training and nutrition courses.

Mineral Springs is living proof that the cooperative model – one that empowers its women members – can work, not just socially and environmentally, but commercially as well.

The hybrid model…

But these are not the only two models on offer. There is a middle way – as described by Geoffrey Chepkwony*, the Outgrower Manager of Finlays tea company in Kenya. He recalled a time when thousands of individual small-scale farmers sold green leaf to multinationals via Self Help Groups (SHGs).

Although this model sounds fair, it proved vulnerable to lack of traceability, poor leaf quality, and price exploitation of small-scale farmers, which led to illegal tea hawking. When it was abolished, Finlays decided to deal directly with the farmers through the current model whereby farmers are organized into five cooperatives under the Fintea Growers Cooperative Union Limited. “We have since then seen tremendous improvement in the livelihoods of small-scale tea farmers we deal with” says Geoffrey.

Working through the cooperatives, Finlays and other development partners can provide farmers with training, resolving day-to-day issues (which can be escalated to Finlays if unresolved at cooperative or Union level) as well as growth and sustainability initiatives.

39% of Fintea’s small-holder tea farmers are women. Women are employed at cooperative offices, are delegates representing members at the cooperative level and sit as executive board members of cooperatives and the Union. Unusually for the sector (and Kenyan society), 31% of Fintea’s contracted transporters of green leaf are women, using their own lorries.

Through a three-year ‘co-operative to co-operative’ trade development project, the UK’s Co-operative Group, is helping to strengthen the organisation and support it in becoming Fairtrade certified and implementing GLOBAL GAP standards.

Commercially viable mission-led models…

Discussant Erinch Sahan, Chief Executive of the World Fair Trade Organisation, reflected that these examples demonstrated that innovative ownership models can have impact on social issues and be commercially viable without having to maximise profits.

He challenged actors at other stages of the supply chain, beyond production, processing and packing, to adopt similarly innovative, mission-led business models. The incentives for brands and retailers, he said, include the reduction of reputational risk and enhanced brand emphasis on social sustainability issues. WFTO members following this model have proven “incredibly commercially resilient” while ensuring value is fairly distributed.

THIRST heartily endorses that view and joins Erinch in encouraging all of the tea industry’s multitude of stakeholders to take a courageous and creative look at their business models – especially now that COVID-19 has sharpened the focus on its inequalities and weaknesses – and consider how to take them from their 19th century roots, into the 21st centry future and beyond.

*Due to technical problems, Geoffrey was unable to join the roundtable in person. He shared the information that forms the basis for this blog after the event.