By Nelson Mandela Muhoozi
Teas with fair trade label stand a chance to earn more in terms of prices, and get customers faster than those with no fair trade label, Mugabe Gregory, the chairman of Uganda Tea Association, has said.
To get the label, Mugabe says one has to apply to Fair trade International, a German based organisation, and once the application is received, the organisation sends auditors to check various conformity aspects including (ESG) Environmental, Social, and Governance.
According to Mugabe, you have to pass qualification scores on how you are dealing with the workers, if you pay them well, if you are gender sensitive and involving women, if you are applying best agronomic practices, and if you are protecting workers, among others.
If an association’s farmers are non-conformant, Mugabe said Auditors will give a grace period which could go up to two months for the management to put right missing aspects before granting them fair-trade label rights.
However, Mugabe decries that the costs of attaining the fair trade label are high. He stated, “You have to part with close to sh15,000, 000 annually for the label. The organisation has focal persons in the regions who audit various crops including tea, coffee and sugarcane plantations.”
Depending on the number of farmers you have in an association, Mugabe said you pay differently, and that it’s expensive compared to the value of tea Uganda sells.
According to Mugabe, producers still question what value they get from fair trade. But once you are on the register, he says you always have buyers looking for you at the auction.
Need for government support
Mugabe said tea was liberalised and left to the private sector, although the government supported it in terms of seedlings supply.
“There is a small budget for tea seedlings in NAADS but even the planning is not streamlined. Government is just giving seedlings without minding about processing capacity,” he said.
“Apart from seedlings, the Government has not done much, cost of production is high and yet no member of the association has got access to the facility at Uganda Development Bank as the process is long,” he added.
According to Mugabe, the Government can make processing cheap by availing fertilisers, making VAT zero rated. “Out of the 81 million kilogrammes of made tea that was produced by Uganda in 2021, only 8% was locally consumed, and 92% was exported.
This means we are dependent on foreign markets as we can absorb our own production,” he said.
Mugabe advised that the Government can have bilateral agreements where Uganda can export to countries like Egypt without passing through the auction, thereby garnering more value from its tea.
“We could have a tea desk or board composed of both Government and private sector experts at The Ministry of Agriculture or Trade to advise on various tea issues, if the idea of a tea authority has failed,” stated Mugabi.
High production costs
Although a policy for the tea sub-sector is good, Mugabe said what is more critical is streamlining the processes from farmer level.
He said, “The cost of power is high, you pay sh560 per unit and over 50% of the time factories run on generators, and yet the fuel is also very expensive. Plucking rates are high and you can’t raise the rate as you are already paying high costs on fuel and transportation.”
“You will spend about sh11m for a 24 feet container to Mombasa, then pay for warehouse storage. Not to mention the commission fees because Uganda’s teas are sold by brokers on the auction,” he added.
According to Mugabe, the tea sub-sector needs a fertiliser fund like Kenya is doing. “If you reduce the cost of fertilizers, you have money to pay for labour to handpick tea which preserves quality,” he stated.
In Kenya, Mugabe said, smallholder farmers earn more from their teas because the tea is handpicked which preserves quality.
“On our side, we find ourselves at a disadvantage. Because we have scarcity of labour, most of the multinationals use machines for plucking, even when it compromises the quality. Machines save on labour, but pick unselectively compromising quality. So, our teas are always discounted because the colour is compromised by machine plucking,” he said.