Why smallholder tea farmers need support
In countries such as Sri Lanka and Kenya, small-scale tea farmers grow the majority of tea. However, the prices farmers receive are low and fluctuate. They are the most vulnerable in supply chains controlled by large companies and earn a small portion of the selling price of tea on the international market.
Increasing pressure on supply chains to bring tea prices down is often passed on to small-scale tea growers, pushing them into further poverty. They also have to compete with tea produced more cheaply by estates.
Smallholder farmers receive lower prices from the tea factories that buy their green leaf tea due to its frequent lower quality and because they don’t have as much knowledge of market prices. They might not have access to agricultural inputs they need, such as irrigation and fertilizers, to improve the quality of their tea.
Receiving a higher price for what smallholders grow is a significant challenge in light of tea industry pricing. More than two thirds (70%) of the world’s tea is traded via auctions, an unusual method among agricultural commodities, and there is not a futures market like in coffee and cocoa.
While the system might seem to be a fair one in which prices are determined exclusively by supply and demand, auction sales are dominated by a small number of companies. The purchasing power of large companies is such that they can often influence demand, and therefore price, of particular types and qualities of tea. Buyers and brokers have been known to collude to influence prices, lowering the price producers receive for their tea.
In 2005, the Kenyan National Chamber of Commerce tried unsuccessfully to stop the practice of tea auctions. Unfortunately, this means middlemen can take a large portion of the price paid by the factory for the growers’ tea.
Tea pickers and workers
Commercial estates, also known as tea gardens, grow most of the world’s tea, employing workers to care for the bushes, fertilizing, weeding and plucking the leaves from them.
Workers are also employed in the tea factories that most estates operate, turning the green leaf into “made” tea. The wages on tea estates are notoriously low, and while generally around the national legal minimum, seldom provide a decent, living wage, often not enough for workers to feed their families properly. A lack of job security is an issue for many workers, along with representation by effective, trustworthy and independent trade unions.
Labor makes up around half the production costs of growing tea. Of those labor costs, plucking accounts for 75%. It is a physically demanding task with back pain common and pluckers can be exposed to pesticides. Estate workers are often largely women, who often work long hours for less pay than men. Discrimination and sexual harassment against them is widespread.
Tea sector workers have little power to make their voices heard or bargain with estate management for better wages and improved working conditions, a power imbalance that leaves them in a cycle of poverty.
What does Fairtrade do to support tea growers and workers?
Fairtrade works with small-scale tea farmers and and tea estate workers. The 2012-13 Fairtrade Tea Monitoring and Evaluation Report shows that 177,200 farmers and 122,700 workers are part of Fairtrade. Fairtrade’s Standards aim to improve estate workers’ employment conditions and also protect their rights. For smallholder organizations, the Standards offer support to members to gain more control within tea supply chains and boost their incomes.
Fairtrade tea producer organizations are paid the Fairtrade Minimum Price according to where they are in the world. It ranges from $0.64 to $0.91 per pound. Both Fairtrade tea farmers and workers receive $0.23 per pound in Fairtrade Premium.
Specific Standards for Fairtrade tea estates support workers to organize and bargain with management and move towards living wages, which requires strong representation. Our new Hired Labor Standard offers greater support for workers’ Freedom of Association in practice.
We also changed how the Premium can be used by Fairtrade tea workers’ organizations, who can now spend up to 20% on cash payments or in-kind benefits for worker members. This rises to half if the majority are migrant workers.
In 2012-2013, more than $5 million in Premium was paid to small farmer organizations or workers’ organizations on Fairtrade tea estates. The Premium was largely spent by — a total of 64% — on projects such as housing, education, health care and loans.
Addressing low wages in the tea industry together
Fairtrade has long championed and advocated for change across the tea sector to tackle low wages. Progressing towards a living wage has been an aspiration for years – our Standard for Hired Labor states that Fairtrade tea estates begin paying workers the legal national minimum wage and then move to a living wage.
There are a number of challenges to overcome, including the absence of a universal definition or living wage benchmarks for agricultural workers in different countries. Another issue is how to ensure companies can progress towards a living wage without the businesses that pay them being pushed out of the market, which could in turn threaten workers’ jobs and livelihoods. Despite the fact that Fairtrade tea workers have benefited from the Premium, which can be invested in health care, housing and education, they have not seen enough advancement on wages.
In 2013, Fairtrade International, collaborating with partners, started work on benchmarking living wages . Experts Richard and Martha Anker were commissioned to tailor their system of calculating this wage to what an agricultural worker, and his or her family, need. They ran four pilot studies – in wine grape farms in South Africa, commercial banana farms in Dominican Republic, tea estates in Malawi and flower farms in Kenya. What resulted was an assessment of expenses based on three areas – the costs of food and nutrition, decent housing and other essentials.
After the setting of living wage benchmarks, a company’s progression from paying legal minimum wages to a proper living wage is the next area to tackle. For workers to negotiate better pay and improved working conditions, they need to be well represented by trade unions and strong organizations. This is a point well recognized in Fairtrade’s new Standard for Hired Labor. Progress towards living wages is not a quick process and change across the sector is needed. But Fairtrade is committed to driving this change. Read more about our work on living wages and workers’ rights.
We are not just working to set living wage benchmarks and promote wage bargaining. We are also actively participating in industry projects such as Tea 2030, a worldwide initiative to create a sustainable tea industry for the years to come, so that one day better wages are a commitment that everyone along the tea supply chain makes.