Fair Value Distribution Analysis in the Tea Sector: A Research to Advocate for Fair Tea Pricing and Wages in Kenya and Uganda
Tea makes up over 70% of household income for smallholders, yet most live below the poverty line and are food insecure. Kenyan farmers received 73.5% of auction prices in 2022, but tea workers in both countries earn only 35-68% of a living wage.
Overview
Fair Value Distribution study for Solidaridad ECA under Reclaim Sustainability!, looking at how value is shared in the smallholder tea sub-sectors of Kenya and Uganda. It covers four themes: value distribution among smallholder farmers and their relations with factories, wages and conditions of tea workers (including collective bargaining agreements), tea markets and domestic consumption, and cross-cutting gender, environment and advocacy issues. Data were collected in 2022 from farmers, worker unions, factories, industry bodies and government, to support advocacy for fair tea pricing and wages.
Key findings
- Auction prices fell from 2017 to 2021: in Kenya from US$2.97 to US$2.09 per kg, and in Uganda from US$1.88 to US$1.14 per kg.
- Kenyan smallholders received on average 73.5% of auction prices in 2022, or KES 50.2 per kg of green leaf, up 13.6% from KES 44.2 in 2021. KTDA factories pass on about 65-75% of auction receipts, and the share varies between factories east and west of the Rift Valley.
- Uganda green leaf prices range from UGX 300-600 per kg (lowest in Toro at UGX 300-350, highest in Kabale/Kigezi at 550-600). Farmers supplying private or multinational factories receive a small share of benefits, reported as 10% in some passages and less than 45% in another.
- A Kenyan smallholder with 1 acre (3,500 kg green leaf at KES 50.18/kg) nets KES 110,505.50 (US$920.90) a year, only 14% above the agricultural minimum wage. Ugandan farmers earn about 59% less. Labour takes about 40% of gross tea earnings, and 95% (Kenya) and 90% (Uganda) of farmers are dissatisfied with earnings trends.
- Kenyan smallholder workers earn a median KES 6,000 ($50) a month, about 40% of the single-adult living wage of KES 15,130 ($127). Kenyan plantation workers earn KES 17,921 ($149), 68% of the family living wage of KES 26,327 ($219). In Uganda, wages are 40% (smallholder workers) and 35% (plantation workers) of the living wage.
- Yields were 1,968 kg/ha in Kenya and 1,509 kg/ha in Uganda in 2021, against a potential of 4,745 kg/ha. Of surveyed households, 23.8% in Kenya and 18.7% in Uganda live on incomes below KES 5,000 or UGX 153,000, and only 17.8% are food secure.
- Women spend on average 11 hours a day on productive and reproductive work against 4.4 hours for men, and make up over 60% of the production workforce. They remain under-represented in management and on boards.
In figures
40 % of living wage
68 % of living wage
40 % of living wage
35 % of living wage
Data table
| Item | % of living wage |
|---|---|
| Kenya, smallholder farm workers | 40 |
| Kenya, plantation workers | 68 |
| Uganda, smallholder farm workers | 40 |
| Uganda, plantation workers | 35 |
| Living wage | 100 |
2017: 2.97 → 2021: 2.09 US$ per kg
2017: 1.88 → 2021: 1.14 US$ per kg
Data table
| Item | Earlier | Later |
|---|---|---|
| Kenya | 2.97 (2017) | 2.09 (2021) |
| Uganda | 1.88 (2017) | 1.14 (2021) |
Recommendations
- Support value chain upgrading: organise farmers into cooperatives (modelled on Rwanda and India), develop cottage factories for specialty teas, and use public-private financing for energy and infrastructure.
- Work with CSOs to strengthen farmers' capacity to demand downward accountability from factories, and address the large regional differences in productivity.
- Strengthen trade union capacity for collective bargaining, and train plantation workers on occupational health and safety and workers' rights.
- Support a framework for a fair living wage benchmark for tea workers and lobby for its adoption. Lobby companies to end discriminatory practices in housing, seasonal-to-permanent transition and promotion.
- Commission studies on the effects of machine plucking on safety, quality, pay, household welfare and sector sustainability.
- Develop export promotion and value addition strategies, negotiate lower tariff and non-tariff barriers for value-added tea, support specialty tea trading platforms, and lobby for lower VAT to promote domestic consumption.
- Support finalisation of the tea policies in Kenya and Uganda with a focus on fair value distribution, reduce gender inequalities, and build multi-stakeholder climate adaptation strategies.
Methodology
Mixed methods: document and secondary data review (EATTA, AFA, ITC), 14 focus group discussions (8 in Kenya, 6 in Uganda) with farmers and worker representatives, key informant interviews along the value chain, and a survey of 213 tea-farming households.