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08 May 2006
Kenyan Tea Company Unites Social Responsibility with Profit
Highland Tea furthers Fair Trade for Kenyan products, earns USAID help
Washington -- The inspiration for Kenyan Wanja Michuki to get into the business of Kenyan tea was the small-scale tea farmers in her country, who work from daybreak to dark for little profit.
"Even though small-scale tea farmers produce so much of Kenya's teas, they're still poor. I spend a lot of time in our village, where my mum has her tea farms, and we're basically part of a small-scale tea farming community, so we know our neighbors," Michuki said in a recent phone interview with the Washington File.
She explained that the small-scale farmers, mostly illiterate, sell their teas in bulk at the Mombasa tea auction for a very low price (around $1.50 per kilogram), and "year after year they've been faced with rising costs, so what they get at the end of the day gets smaller and smaller."
The middlemen capture all the profits, she said. "The minute teas leave the auction market, someone buys them, packages them and puts them into a box to sell. … And a box of tea with 20 tea bags, or about 40 grams of tea, sells for from $3 to $6. That value, when you compare it to $1.50 the farmers earn, is being earned by someone somewhere else. And farmers are locked out of that."
Although she was educated at prestigious U.S. universities, Michuki said her heart remains very much in Kanyenyaini, the village of her grandmother in the Aberdare range at the foot of Mount Kenya. She spent many happy summers there after growing up on a coffee farm. Her mother, Watiri, finally decided to devote her own bountiful acreage to tea growing in the region. "She planted her first tea seedlings in 1991," Michuki said.
Michuki worked at Barclay's Bank in Kenya before coming to the United States to obtain her master's degree in business administration (MBA). "I've always been drawn to development," she says. "My plan was to go into investment management and then go back home with the skill set that I had gotten from banking and apply that within the Kenyan context as a way to attract investors to come and invest in companies listed on our stock exchange.
"So I spent my summer in investment banking at Merrill Lynch in New York. At the end of your first year [of the MBA], you do a summer [internship at a business], but I realized that there was just zero passion there for me. My heart wasn't in it. I kept asking myself, 'How is this making an impact, really?' I was so far from economic development."
She embarked on a long period of research while working in banking, to see how she could marry corporate social responsibility with a viable business, and discovered Fair Trade, the principle of which is to provide fair wages and good employment opportunities to economically disadvantaged artisans and farmers worldwide.
Fair Trade is an international consortium of nonprofits organized under the umbrella Fairtrade Labelling Organizations International (FLO), a standard-setting and certification body. It permits more than 1 million producers, workers and their dependants in 50 countries to benefit from products labeled “Fair Trade.”
Through her research, Michuki found contacts who invited her to attend a gathering of top tea producers in the United States, including Steven Smith, who heads Tazo Teas, sold by the Starbucks chain and others. After hearing her plans, she said, Smith commented: "'This is fabulous. You have to do it. You come from tea country, your mother's a tea farmer -- there's heritage involved here. We spend days just drumming up marketing spin, and you have it. I encourage you to do it.'" And thus the mother-daughter Highland Tea Company was born. (See related article.)
Michuki now works with the Kenyan Tea Development Agency, "which is basically like a cooperative of the small-scale farmers. They manage the factories that we send our teas to. And we managed to get the Kanyenyaini factory on line for Fair Trade." She said.
Currently, the African Growth and Opportunity Act (AGOA) does not help Highland Tea because the company's product is being packaged in the United States instead of Africa.
"We bring the tea in bulk and have the packaging done here," Michuki said, "but in line with our economic development goals, I want to see that done in Kenya. It would make a difference, because when you bring tea here to the U.S. in packaged form, you have to pay duties, but AGOA would help us specifically because we're an African country and we're bringing in a packaged product.
"And that's the way we want to go -- take that production to Kenya, and that contributes to jobs there."
She added that the U.S. Agency for International Development (USAID) has helped with trade shows. "This next month we're doing a trade show in Chicago, the Fancy Food Show. USAID is sponsoring our participation there. They pay for our booths and make it possible for us to attend."
More information on the Highland Tea Company is available on its Web site.
For more information on AGOA, see African Growth and Opportunity Act; for additional information on U.S. policies and programs for Africa, see Africa.
(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
