Highlights: Unilever sells tea business to CVC amid worker welfare concerns and sustainability pledges; tea industry wakes up to urgency of climate crisis; workers continue to lobby for decent wages amid price fluctuations.
Image: Kaddukelle estate workers protesting near the muster shed on September 29. Photo – WSWS media
THIRST was interviewed for a Financial Times article ‘Plantation conditions in spotlight as Unilever tea sale heats up’.
THIRST is convening a group of fellow NGO members of the Ethical Trading Initiative to monitor and seek solutions to sexual abuse in the tea sector, as highlighted by the recent legal cases in Kenya and Malawi.
Work is ongoing on the literature review phase of THIRST’s Human Rights Impact Assessment of the tea sector. We aim to publish a report toward the end of March 2022.
There will be a pause in the programme of THIRST TEA Talks until the New Year. The new programme of talks will be framed by issues emerging from the HRIA. Watch this space for more details. Catch up on past TEA Talks that you missed on our What’s New pages.
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Tea News Summary
In this month’s summary:
- Unilever’s tea business sold to private investors amid concerns about worker welfare
- Tea industry waking up to urgency of tackling climate crisis
- Strengthening spotlight on forced labour in tea
- Health and education support offered for tea communities
- National governments seek to boost tea production despite global oversupply suppressing prices
- Continued pressure for better wages across tea origins
- Kenyan tea prices rally, while India and Bangladesh struggle
- Struggling Assam tea growers discover lucrative alternative crop
Unilever’s tea business sold to private investors amid concerns about worker welfare
The big tea industry news last month was the “cash-free, debt-free basis” sale of Unilever’s tea business, re-named ekaterra, to the private equity firm CVC Capital Partners for €4.5bn (£3.8bn). The sale is expected to complete in the second half of next year. The new company, which has €2bn of annual revenues, includes iconic brands such as PG Tips, Lipton, Brooke Bond, Pukka, T2 and Tazo, as well as three large tea plantations in east Africa. Unilever will keep its iced tea partnership with PepsiCo and its tea operations in India and Indonesia where consumption is rising, generating €1bn of sales.
Two of the three final bidders for Unilever’s tea division reportedly pulled out due to concerns about working conditions on Unilever plantations – including court cases over health and safety and the failure to protect its workers from ethnic violence. According to the Financial Times “Their decision underscores the heightened sensitivity of investors, even in the traditionally hard-nosed private equity industry, towards assets that have substantial environmental, social or governance risks.” It highlighted the importance of Ekaterra’s eventual buyers having to “handle sensitive questions of human rights and fair pay” on its three African estates. It is reported that CVC believes that “improving the unit’s environmental, social and governance credentials will ultimately help them to sell it on at a profit.” However, the Governor of Kericho where the estates are located, says that “Disposing of the land under leasehold without involving the people of the county violates the Constitution.“
Tea industry waking up to urgency of tackling climate crisis
Fairtrade has published a report warning that the intensifying impacts of climate change pose a serious risk to global agricultural production and directly threaten the livelihoods of millions of Fairtrade farmers around the world – including tea farmers. Increased investment in climate adaptation and resilience measures are therefore critical to prevent plummeting incomes for Fairtrade farmers. Meanwhile, the Guardian reports that “Tea drinkers [are] willing to spend more on brands with strong sustainability credentials” citing successful sustainability-aware companies such as Clipper (the first tea brand to offer “biodegradable, unbleached, and non-GM teabags” and Yorkshire Tea.
The tea industry is waking up to this realisation, with ekaterra’s CEO, John Davison, announcing plans for the company to become climate positive through collective action across the tea industry. During COP26 he pledged to make ekaterra net-zero by 2030 and cited ekaterra’s sustainability progress since he took charge. “Commitments include sourcing 100% sustainable tea by 2023, switching the entire line to plant-based tea bags, and recyclable or reusable packaging materials by 2025, with a pledge to reduce greenhouse gases by 80% by 2030.”
The Sri Lanka Export Development Board (EDB) is assisting five farmer groups comprising 254 farmers to acquire organic certification from internationally accredited certification bodies. Through the scheme130 Ha of land has been certified as organic in a bid to improve and stabilise exports.
Tea farmers and scientists in China report seeing a shift toward more sustainable cultivation, with smallholder tea farmers applying agroecological principles leading to “better-tasting tea, lower management costs, and richer biodiversity”. But they have also highlighted the need for government policy to further boost these initiatives, which can contribute to combatting the climate crisis through sequestering carbon and contributing to local food security.
Researchers have developed Site Specific Synthesis of Projected Range (SPR), which provides “novel, site-specific climate information” for Malawi and Kenya, which will be more relevant and effective than generic climate projections. Tea growers who have trialled the system say that it has “helped them identify emerging risks and potentially suitable adaptation strategies” and puts them in a better position to seek government support for adaptation options such as afforestation and crop diversification. Their tea production has been damaged by increasingly common droughts, frost and episodes of high temperature.
As a recent study by the International Center for Tropical Agriculture predicts a significant climate crisis-driven reduction in tea growing in Kenya, threatening the livelihoods of over half a million small-scale tea farmers, the Bill & Melinda Gates Foundation has funded a US$1.5 million climate adaptation credit facility. Finlays has trained over 10,000 farmers, members of Kenya’s Fintea Growers Cooperative Union, to adopt sustainable agricultural practices. Finlays has also pledged to protect and enhance 100,000 hectares of natural forest by 2022, partnering with the Initiative for Sustainable Landscapes to restore and conserve 60,000 hectares of the Mau Forest.
The climate crisis is also impacting on tea in India, drastically damaging the flavour of Assam’s famous second flush tea, according to the Tocklai Tea Research Institute. It predicts that, if climate changes continue at the present rate, “some of the world’s largest tea-growing areas will be among the hardest impacted by extreme weather, and their yields are expected to be drastically decreased in the next decades”. North Eastern Tea Association (NETA) described climate change as “one of the top five challenges for the tea industry of Assam.”
Strengthening spotlight on forced labour in tea
The Freedom Fund announced the launch of a new Tariff Act Legal Fund to provide grants of up to US$50k to civil society organisations to gather evidence linking forced labour practices with goods imported into the US. (Some tea producing coutries are already on the list and civil society organisations are looking at forced labour in the tea industry of other countries to potentially add to the list).
The UN Special Rapporteur on contemporary forms of slavery is in Sri Lanka on a seven-day visit to examine labour conditions in various sectors and industries including apparel, tea plantations, tourism, and domestic work. The move comes as Sri Lanka faces the prospect of losing access to the Generalised Scheme of Preferences plus (GSP+), a lucrative trade concession worth over 500 million US dollars from the European Union, next April due to the island nation’s failure to fulfil some of the 27 international conventions it had agreed to with the EU.
Health and education support offered for tea communities
In response to the strain imposed by the Covid-19 pandemic and climate change on tea smallholders and women-led farmers in Sri Lanka, the Rainforest Alliance has donated vital medical equipment to hospitals where most of the smallholder tea growers and plantation workers employed by Rainforest Alliance certified tea plantations access their health and medical needs.
In India, the Assam government has approved the reservation of seats in its eight State-run medical colleges for students from the “tea tribes” community. These include seats for MBBS and BDS [Bachelor of Dental Surgery] for members of the tea garden community working across 803 major estates and numerous small tea gardens. The Cabinet also approved the conversion of a land allotment certificate to a periodic title deed to a property in rural areas.
National governments seek to boost tea production despite global oversupply suppressing prices
Government of Tanzania has promised to do everything in its power to boost tea production in the country, from the current 34,000 tonnes to 40,000 tonnes. Tanzanian tea farmers have long complained about low prices and an unreliable market leading to low profits. Interventions will include research to develop high yielding seedlings, training small scale farmers on better farming methods and developing four big plantations managed by the Korogwe and Lushoto Smallholder Tea Development Agency (TSHTDA).
The Sri Lankan government is also aiming to boost the growth of the tea sector by providing tea plants free of charge and financial assistance for land preparation to new small holder farmers from next year. The minister advised using pluckign machines and using “barren lands that are not currently used for tea planting”.
Continued pressure for better wages across tea origins
The Global Living Wage Coalition and Anker Research Institute have released a new living wage update for Sri Lanka, with context provided in the estate sector. The study was originally conducted in 2019, and this update accounts for changes in inflation, exchange rates, costs of living, and policy changes since the original reporting. This report estimates that the wage a worker in the estate sector needs to receive each month to afford a basic but decent standard of living is LKR 27,131 (USD 135). Many Sri Lankan tea workers have been demanding a wage of Rs 1,000 a day; like those on Katukelle Estate who have been ‘locked out’ since September 29 for striking to increase wages. They rejected a new productivity agreement proposed by management as a condition of allowing them to resume work at the tea estate.
Meanwhile, in Kenya, tea growers have signed a Collective Bargain Agreement (CBA) with the Kenya Plantation and Agricultural Workers Union (KPAWU) that will see a 12 per cent wage increase for 30,000 workers. Wages will range from Sh21,974 (up from Sh19,557) to Sh60,559 (up from Sh35,583). The increment does not apply to KTDA workers.
In India, West Bengal’s government have committed to fixing the minimum wage of tea workers before the start of the next tea season in early March. In Bengal, tea workers receive Rs 202 a day (although workers had originally demanded Rs 442). The pledge to fix the minimum wage came after tea workers demonstrated in Jalpaiguri and Alipurduar districts.
A number of Darjeeling Tea companies have been summoned to a Supreme Court-appointed one-man committee in December on alleged default on statutory benefits payments to workers, including irregular provident fund deposits, lack of medical facilities and drinking water supply, poor wages and non-payment of the annual bonus which forms a significant part of tea workers remuneration.
Protesting Assam tea workers blockaded their estate office over a wage dispute. Although the protest was initiated by the Asam Chah Mazdoor Sangha (ACMS), trade union, workers were critical of the union claiming its leaders were politically motivated and failed to hold management to promises made under earlier agreements. Assam’s tea worker representative organisations, the ATTSA and ACMS also protested against Madarkhat Tea Estate management over the non-payment of wages for two months.
Kenyan tea prices rally, while India and Bangladesh struggle
The average price of tea at Kenya‘s Mombasa auction has been improving since the government established a minimum price of Sh263 to cushion farmers from losses after prices had fallen to a Sh186. At the end of November, prices had rallied to Sh271 from Sh255 in the previous sale despite the increased volumes typical of this season. In the last auction of November, the volume sold was 91,785kg higher than the previous auction. Healthy prices and volume sales, in addition to the use of more efficient machinery, using factory-owned firewood and managing labour costs, according to KTDA Holdings chairman David Ichoho, “means farmers are likely to earn significantly better returns this financial year.” Other reforms affecting Kenyan tea production are increasing monthly pay and lobbying for a Sh1 billion fertilizer subsidy. In theory, farmers should benefit, but Kenya’s Ministry of Agriculture has dispatched a team of auditors to check the accuracy of weighing machines across all tea buying centres to prevent the “theft” of tea from farmers.
In contrast to Kenya’s increasing prices, in India bulk tea prices have been declining, particularly in the bought leaf segment, which was down by Rs 77 per kg or 33 per cent, while wages and energy costs rose sharply. But ICRA – the Indian Credit Ratings Agency suggests that “…players who are focused on producing quality teas are likely to witness a much lower decline this year.” They point out that “average auction prices of teas manufactured from own garden leaves of the top 50 estates of Assam and Dooars have witnessed a decline of only 8.5 per cent against 25 per cent for the overall auction average during H1 FY22,” Prices of tea from Kenya and Nepal are nevertheless even lower than in India, leading to the Tea Board of India clamping down on imports to India from those countries.
Increases in fuel costs for both transport and processing tea have also hit Bangladeshi tea producers hard,. this, combined with record production has led to consignments of tea being unsold in auctions and lower prices. Between 30 and 50 per cent of tea has been unsold at auctions last month, with the unsold tea adding to the oversupply and likely to further suppress prices. The Bangladesh Tea Board reported that the average price of tea per kg at the beginning of the 2021-22 auction year was Tk213, falling to Tk191 more recently.
Struggling Assam tea growers discover lucrative alternative crop
India: Assam’s tea growers battling high production costs, low profit margins, labour problems, and fuel shortages have begun planting ‘perfume trees’ to supplement the crop. The agarwood tree, which produces its valuable aromatic resin when injured or infected, has become “critically endangered” through excessive damage, leading the government to offer incentives offered incentives to farmers – including tea growers – to create agarwood plantations. The trees don’t require manure or irrigation and the moth that infects it to produce the resin is found naturally in Assam.