October 2, 2016

 Assam Tea

 What comes to your mind when we think of the Tea Industry in Assam?  For some it might be a symbol of exploitation or oppression of the poor unfortunate labourer’s, for others it might be meaningful employment. For the political parties it might be a source of vote bank, and for the government it might be just a source of revenue.  For some bureaucrats it might be rent paying subscribers of license permits, and for few others it might have helped curb extremism by creating jobs. For most of us in Assam it is a very large industry but for India Inc, it is too tiny to even consider investing in it.

 Incorrect perceptions can be very dangerous hence it has become necessary that we understand this industry better. In this article I shall try to articulate an image that I have seen from close quarters and address each of these perceptions. Every industry has some essential components and in this case they are Small Tea Growers, Bought Leaf Tea Factories, Proprietorship Tea Estates, Corporate Sector Tea Gardens, Tea Labours, various government regulators, Auction system, Bulk quantity buyers and Assam Tea. Some of these components are deemed more important than others, but the most important component - Assam Tea has been totally neglected for many years. Policy makers and opinion makers will have to make sure each component is heard and understood otherwise Assam Tea will disappear from this earth. 

 Let us try to understand the worth of Tea Industry. Assam produced 618 million Kg tea during the year 2013 &  approximately 60 percent of that  (i.e.371 million Kg) is produced by tea estates with their own green leaf. Remaining 40 percent is either produced by Bought Leaf Tea Factories or Estate factories with purchased green leaf. It is known that the price of a tea garden is usually the quantity of tea produced multiplied by market rate of per Kg Made tea. At present the market rate is Rs 500 per Kg made tea so if we multiply 371 million Kg by the market rate we get Rs 18600 crore, which is the approximate worth of all the tea estates of Assam. I will refrain from evaluating the worth of the unorganized sector (small tea growers) as it is very difficult to do so because many of them do not have title deeds. In a state that does not have any industry, this figure Rs 18600 crore- sounds like a big number but it is tiny when we compare with other industries. For example one individual N. R. Narayanamurthy, founder of Infosys, is worth Rs 10000 crore or Nandal Nilekani is worth Rs 7000 crore. In other words Reliance can buy all the Tea Estates of Assam, if they accumulate their profit after tax for three quarters.   Recently I was told at a seminar on BCPL (Brahmaputra Cracker and Polymer limited) at Dibrugarh that more than Rs 12000 crore has been spent on the project. BCPL has employed 400 permanent employee so far and might employ another 300. The IT sector in Karnataka employs 1 million professionals and clocks approximately Rs 1.5 lakh crore. On the other hand, the Tea Industry employs 5 lakh permanent labours, 5 lakh seasonal labours and another 10 lakh directly or indirectly depends on it. And the retail market in India is just Rs 15000 crore. All these facts and figures points out that even if the entire amount of Rs 18600 crore is spent on the 20 lakh people that resides on Tea Estates there is a limit on how much welfare is possible in this tiny low skilled labour intensive  industry. 

 So the perception that all the Tea planters and companies are out there to exploit or oppress the poor tea labours is incorrect. The reality is that many of them want to do a lot but were unable to do so because of the limited turnover. I am not saying that tea planters should not do welfare or work towards upliftment of the workers just because they cannot do so under the present circumstances. The real issue is that we have focused on the input (i.e. labour welfare) instead of the output (ie. Assam tea). We have to shift gears and put all our energy on the output - Assam Tea. If Assam Tea sells well then the industry will earn enough for everything including social obligations and R & D. We have failed in doing so because we have put the cart before the wheel.

 Let us now try to understand how teas are sold. Approximately 48-50 percent of the total teas produced in Assam are sold through Tea Auction at Guwahati or Kolkata the remaining teas are sold through private mode or exported directly. The average price of tea, during the year 2013, sold through Guwahati Auction center was Rs 132.56 and Rs 157.5 through Kolkata Auction. And the combined average price of tea at all the north Indian auction centres was Rs 139.8. By selling tea at such prices the tea industry is simply unable to meet all the social obligations enforced  by law. 

 Many people ask this question, why is the average price of Assam tea so low? Some will say that we do not know how to market, others will say that the quality has detoriated due to climate change or we debased everything. I think they are only partially correct but the real reason is that our teas are sold as a commodity.  Anyone can buy this commodity, blend good quality teas with bad quality teas, put it in a pouch and sell it in the retail market for the consumers. If we look at the packets available in the market then we will see that there are three segments: The so called premium segment such as Taj Mahal or Tata Tea Gold in the range of Rs 400- 430 per Kg, The Medium Segment such as red Label or Tata Tea Premium in the range of Rs 330- 360 per Kg, The popular economy segment such as Agni in the range of Rs 190- 210 per Kg. The premium segment packet contains a small percentage of good quality teas and the rest are medium quality or poor quality tea used as fillers with 10% market share. The medium segement contains even smaller percentage good quality teas and the rest are medium quality teas or fillers with 42 % market share. The popular economy segment contains only medium quality teas and poor quality fillers with 48% market share. Because of this system the general consumers never get to taste the pure unblended premium quality Assam Tea.

 Since the price of the packet is fixed, the packeteers will buy the tea at a set average price so that they can keep a profit margin for themselves. The result is that if the top 40 gardens sell at an average price of Rs 200 then the bottom 300 gardens will sell teas at an average price of Rs 120 or below so that the average price remains Rs 138. The average price of Rs 138 in the auction will have to be maintained so that packets can be sold at Rs 190-210 with a margin. Today the top 30 gardens are rewarded with an average of Rs 200 and above for producing quality. Now let us, for a moment, imagine that 800 gardens suddenly start producing high quality teas. Will all the 800 gardens receive an average price of Rs 200 and above? The answer is no, because the retailers has to sell it at the fixed price and will maintain the auction average at Rs 138. It has become a zero sum game.

 The following 2 things happened because of this system.

 - (a) Despite producing more than 50% of the total tea produced in India we do not have a single brand from Assam that has any significant market share in India. Snacks are produced in Rajasthan and they have Bikaji and Haldiram. Milk is produced in Gujarat and they have Amul. What have we created?

 - (b) Assam Tea became a cheap road side beverage and can be found only in cheap regular hotels. We have seen Sri Lankan tea such as Dilmah in our domestic flights or Basilur in expensive retail outlets. Expensive Chinese teas or Twinnings are found in cafes at Five Star Hotels. Worst part is that the packaging materials used for packaging Darjeeling tea or Chinese tea is more expensive than the Assam tea itself.  

 My biggest worry is that if we keep selling Assam Tea as a cheap commodity we might find that the fate of Assam Tea would be similar to that of Bata slippers.  There was a time when everyone used to wear Bata slippers but with increase in purchasing power after the reforms of 1991, people abandoned Bata and moved on to other expensive brands. 

 I am not advocating that we should just move out of the present system and totally decommoditize Assam Tea. That is not even possible, we need all kinds of tea for the various segments of the market and the present system is decent enough for the mass quantity commodity producers. But this system does not reward the high quality producers and gets lost to blending. I have seen Chinese teas selling in the range of Rs 8,000 to Rs 60,000 per Kg in retail. Just compare that with our retail price range of Rs 190 to Rs 430. I need to mention here that the China produces mainly Green tea, Srilanka produces Orthodox tea while Kenya & India produces CTC tea. Unfortunately we never had a visionary business leader in Tea Industry to move forward in the right direction nor did we ever respect the enterprising spirit. 

 Up until 1961 we were major orthodox producer but within a decade by 1971 we became a CTC producer for various reasons. We will have to accept it that the Chinese marketed their brand of green tea much better than we marketed our CTC tea. The sad part is that the Chinese or Darjeeling tea is sold for flavor as expensive products, but our tea is sold as cheap commodity despite having flavour as well as unique reinvigorating property that those teas do not have.

 Now given this situation how do we decommoditize Assam tea? It has to be done both at individual level as well as at the industry level. Some individuals are doing it but sometimes it is very difficult to do it at individual level. Orange from Bhutan is sold at a specific price range while that of Pune is sold at another range.  If someone tries to sell Bhutan orange at the price of Pune orange it is difficult to convince no matter how good that particular orange is. But of course this can be done with innovation and value addition. 

 Professor Mithileswar Jha of IIM, Bangalore once suggested, at a seminar in Dibrugarh organized by Bharatia Chah Parishad, that there is huge potential for the small tea growers to add value and explore the high end market. He mentioned that when the farmers of Gujarat felt that they were not getting fair price for their produce they formed a society and went for decentralized production and centralized marketing. What it means is that the individual farmers sell their milk to the society, which they own, and receive the price based on fat content. But the society is completely managed by disciplined professionals. The society markets the final product under the brand name Amul. Amul has been a great success story of independent India. Something similar can be created but it is necessary that professionals run it not the growers themselves or government bureaucrats.  Occasionally many people suggest Kenya Tea Development Agency (KTDA) model for small tea growers  but it needs to be known that even KTDA is a corporate run by professionals. Small Tea Growers set up factories and lease out to KTDA. KTDA operates the factories and sell the teas in auctions. KTDA has been fairly successful but Amul model is better because it completely eliminated middleman and created a household brand name. I am optimistic and hope to see something similar in my lifetime.

 But unfortunately such visionary things has not happened so far instead we see STG’s protesting for fair price infront of Tea Board offices or Administration. Sometimes their demands are fair and sometimes not but the issue is that there is no political solution for an economic problem. One has to accept that when supply increases demand decreases and vice versa. Even though there is no political solution for an economic problem such protests result in the enactment of laws such as TMCO Act 2003 and hands out discretionary power in the hands of bureaucrats. Discretionary power in the hands of bureaucrats usually results in distortion of the market or corruption and strangulation of the industry.

 I think that a part of the STG leadership tries to project itself as a 100000 strong vote bank and hence use it to demand good price rather than add value to their produce or create a market for it. Our media and politicians would prefer to project them as poor and helpless farmers at the hands of evil capitalist and hence need government patronage. But any STG who happens to be an enterprising person and adds value to his produce or increases his plantation area beyond 10 hectare suddenly becomes the enemy of the society and government. The government says he cannot be registered because the Tea Act, 1953 forbids it and the society claims he is the exploiter of the poor. As long asyou behave like a poor helpless exploited farmer you are loved by our society, media and government. So naturally many of them try to behave like a votebank. 

 We need to look at the sugar industry. In UP, politics took precedence over pragmatism and the government increased the sugarcane price to appease lakhs of farmers but the price of sugar did not increase hence the mills closed down and are unable to pay the farmers Rs 2500 crore now.  Both farmers and Banks that provided working capital, are claiming rights over the stock in the mills. The Allahabad court claims that farmers have the first right over those stocks on humanitarian ground and the banks are threatening not to finance the sugar industry again. We need to respect the market force along with our needs otherwise such a situation is bound to occur. 

 It is understood that the tea planters failed to take the industry to the next level, but to demonise them as oppressors or exploiters at every instance would be wrong and over stretching. We need to look why are we in such a situation? Was there a business friendly environment whereby tea planters could innovate or do better?

 Tea industry is the second most regulated industry after the sugar industry. This industry is regulated directly or indirectly by Tea Board, Central Excise, Inspector of Factories, Weights and Meteorology, FSSAI, Employment Exchange, Sales Tax, Agriculture Income Tax, Income Tax, Labour department, Revenue Department, Provident Fund, Pollution Control Board etc. A Tea manufacturer has to renew 5 licenses every single year and has to deal with atleast 8 to 10 inspectors. Inspector Raj and License permit raj has prevailed for the last six decades. A manufacturers has to get sales tax clearance every month in order to sell his goods.  Usually the struggle to get sales tax clearance begins on the 1st of every month but the superintendent is usually busy or the system is down or absence of electricity in the office and so after repeated attempts one ends up getting the clearance on the 7th or 8th of the month but the process restarts on the 1st of the next month.  So the sold teas gets stuck in the state border or in some godown resulting in delay of payments by the buyers and essentially the manufacturer has to pay higher interest to the financing bank. Usually manufacturers prefer to upgrade the machineries during the off season but sometimes it takes up to three months to obtain a road permit to buy a new machine. I wonder who would prefer setting up an industry in Assam. On top of that once in a while the tea planters receive extortion calls from the extremists. There were instances when it took people between 2 years to 4 years to acquire manufacturing licenses from the Tea Board. 

 Such regulations allowed Indian bureaucrats to formulate policies with little or no technical expertise and armies of peons to open doors for them or carry lunch boxes for them. They get to decide what is best for localized business. Tea planters end up receiving whimsical directive such as sudden ban of jute bags on auction sale but would continue to allow poor quality PP bags. Once they decided that there were more number of BLF than required so went for blanket ban on setting up BLF for a couple of years but allowed existing factories to expand manufacturing capacity. It just destroyed its own purpose.

 Imagine the bureaucrats deciding  for Steve Jobbs what equipment’s to buy and from whom or decided where should he sell his products. I think he would not succeed in creating iPhone or Macbook. Wealth creation requires certain degree of freedom.

 A manufacturer is required by law to submit many monthly returns as well as annual returns to various departments. Some of these returns even require the manufacturers to submit the manufacturing cost and intrusive business details. All the labour laws such as Plantation Labour Act or Industrial Disputes Act were enacted to protect the labour from exploitation or oppression with provisions to prosecute and imprison the industrialists for violation of these laws. None of these laws were linked to productivity. 

 Now even after the existence of these laws and army of inspectors to implement them for the last sixty years it is felt that the workers are not well off in the year 2014. If so then we need to find answer for the following three questions

 (1) Did the army of inspectors fail to implement those laws? If so should they be held accountable and fined or imprisoned?

 (2) Should the Tea Planters be imprisoned for failing to implement all the laws?

 (3) Are these laws faulty? 

 I believe that these regulations and laws neither achieved growth nor welfare of the workers. After sixty years we find that the export percentage has remained stagnant for decades, Assam tea became a cheap beverage, lost international market share and became a tiny industry. It is very unfortunate that the Tea Industry cannot imagine recruiting talents from reputed institutions such as the IIM’s. This industry is not even in competition with other growing sectors. These laws always focussed on the wrong end of the stick. With growth comes prosperity and prosperity makes welfare possible. Industrialist across the manufacturing sector complain that these laws made it impossible to fire lazy workers. These laws kept industrialists busy negotiating with bureaucrats while their counterparts in others nations are busy forging relationships with whole sellers and retailers.

 We need to examine why the IT sector or any high skilled labour intensive and high capital intensive industries such as petroleum refining are exempted from such lawssince 1991. Many of the brightest youth of the country are joining those sectors with dignity and are commanding competitive pay packages. All these are happening without those socialist protective laws. 

 Policy makers need to clearly understand that such laws might win elections but without growth everything including poverty alleviation will remain a pipe dream.

 I would like to specially mention that the Tea Act, 1953 should be amended because it does not allow anybody to plant tea without prior permission from the Tea Board. Imagine the implementation of this law. All the unemployed youth of Assam that took tea cultivation as a profession and changed the rural economy of upper Assam would be behind bars. Most of these acts were enacted with a colonial hangover mindset. We need to reexamine some of these ideas.

 If we take a look at the tea gardens of Assam Tea Corporation, owned by the government of Assam we find that the wrokers are worse off than those of company gardens or proprietorship gardens. Most of them are almost dead, making losses and selling green leaf instead of manufacturing. We need to examine why? I think there are two reasons why most public sector businesses fail. (1) Unaccountability for incompetence (2) Expenses without income is a sure shot medicine for bankruptcy. If we look at a budget prepared by our bureaucrats and policy makers we find that they first figure out the need based expenses then worry about income but in a business one has to first figure out the possible income then plan the expenses accordingly.

 Now let us look at some of the recent developments. Up until the last parliamentary election only one political party had monopoly over the tea labour votebank but now another party ate away a percentage of that vote bank. Both party are competing to win their vote shares. My worry is that both parties might try to appease their unions by setting up unrealistic dreams. Hope good sense will prevail and try to first understand what this tiny industry is capable of and what needs to be done so that the industry is capable of creating wealth and poverty alleviation. The ideological left that has opposed any hint of free enterprise has already created a perception that the tea planters are ripping off the workers. If this continues and the workers are instigated further then we will see many assault on the Managers and some tea planters will be burned alive in the coming year. It is worth mentioning that one of the largest player Hindustan Unilever already sold their tea planatations and manufacturing business few years ago, Tata Tea already spinned off their tea manufacturing business into a new independent company called Amalgamated Plantations. They figured out that it is easier to make profit by buying tea and then retailing it to the end consumers. Hope every one cooperates so that the remaining players survive and plan for better days. I find it strange that many in the media and the Left that preach exploitation will buy a saree for Rs 8000 but will not buy a Kg of tea for Rs 300.  As a tea planter I admit that tea planters made mistake by not investing on infrastructure for the workers atleast during the bilateral trade days and there are a few black sheep’s but most of the companies would be very proud the day we are able to pay highest wages not only in the nation but among all the tea producing nations.

 But for that to happen we need to reform all the stringent laws and government has to become a facilitator not a regulator. We simply need a better business environment to create wealth and jobs legally. The promotion of the bureaucrats that regulate industries need to be performance based. In China the bureaucrats are given targets for growth. Also we tea planters need to totally change our attitude and stop asking for sops from the government. Usually tax is collected from everyone but only a few receive subsidies and ultimately breeds corruption. I dream of the day when tea industry is free from all the subsidies as well as strangulating regulations. 

 People need to also understand what bandh does to this industry. One Assam bandh is more than enough to destroy the quality of Assam tea. Usually the best tea gardens cover 18% of the area for plucking per day in order to maintain the required cycle. Now when that happens even if labours work over time and covers 2% extra it still takes another 9 days to recover. The quality of tea goes down each consecutive days and price goes down by Rs 20 to 30 per Kg for those 9 days. Ultimately everyone in the industry as well as the government bears that loss.

 Moving forward we need to look at what the tea producers within India and outside India are doing. Tea producers in south India have done better than us in reducing the cost of manufacturing by using technology. It is easy for them to acquire technology because Coimbatore, a technology hub, is right  next to the tea producing region on the other hand we have to atleast go to Kolkata or Gujarat. But South India produces inferior quality teas because of the scarcity of labour. The plucking roundays is twice that of us and employ less labour per square metre. Their tea is mostly used as fillers in packets. They pay higher wages than us but do not provide ration to the labours. They get crop throughout the year and prune once in four years. This year most of the south indian teas are selling below the cost of production and may not remain viable in the long run. 

 Journalist Sumit Mitra once wrote that the Communist who dominated the Bengali mindspace for a very long time were successful in injecting “protest” firmly into his reflex system. That has spread into the tea gardens there. There were multiple unions in each tea gardens and influenced management decisions. After 34 years of communist rule and then Mamata Banerjee, West Bengal finds itself on the verge of bankruptcy and during the last three years alone 26 jute mills and 28 tea gardens closed down. This Close down forced the workers onto the brink and are dying of malnutrition and starvation. Initially the owners were blamed and now the government is blamed. So far we are better off and we ought to stop moving towards that direction. 

 Kenya produces approximately 8-9% and Srilanka produces approximately 7 -8% of the total tea in the world. They both are a very small economy and do not have a domestic market to consume that hence export more than 90% of their teas. These two countries compete with each other for market shares. Business Guru Gurcharan Das says that there are only three ways to sell a product: superior cost, superior product and superior service. It will always be difficult to compete with them when it comes to cost but we can have better innovative product with better service. 

 In China most of the tea producers are small tea growers yet what they have achieved is simply remarkable. The way they marketed green tea is amazing, now people feel that Green tea means health and vice versa, just as Coca cola manufacturers made people believe in the idea that Coca Cola means cold drink and vice versa. Even though China produce more than 1761 million Kg they export only 321 million Kg because they created a very strong domestic market. In fact they created an amazing culture of tea. Whenever Chinese visit their relatives or friends they take tea with them as expensive gifts instead of sweets. They celebrate tea ceremony where people sit together and sip variety of teas. Just the sheer variety of teas they sell is overwhelming, infact, I saw more than eighty varieties of tea in a tea fair. And the best part is that they somehow steam the tea and then compress it to preserve the teas for years. Infact some of their preserved teas get better with age because of some kind of fermentation. Every tea producing region in China sells their own flavour in wonderful packages. Their packaging industry is way ahead of us. And the best part is that they parallely developed several industries along with tea. They manufacture variety of tea accessories such as tea pots, tea cups, tea trays, tea furniture made of glass, clay, metal, bamboo, wood or ceramic. They export those tea accessories all across the world. Imagine the amount of wealth they created. China is a strange country ruled by a communist party with capitalist policies but the result is there for all of us to see. Now if we compare Assam tea industry with that of China we ought to realize that wecreated nothing new after the British left. There was never any vision to create parallel industries here. Even after existing for more than two hundred years India consumes only 990 million Kgs of tea per year hence the annual per capita consumption is about 800 grams which translates into 400 cups/year or 1.1 cups per day. The fact that the Tea Act, 1953 made sure unaccountable bureaucrats of India gets to decide who produces tea and how much is not a healthy sign. If we market it properly and produce quality products we should be able to increase the annual per capita consumption to 1600 grams or 2.2 cups per day. At least we should dream about it and hope someday our industry would be worth 20 times what it is today.

 The fact that this 200 year old industry set up by the British is not in a good shape and we could not set up any significant industry in Assam, speaks volumes about our attitude towards entrepreneurship. We have  got to preserve this industry and set up new industries or else the following 3 things will happen (1) Social Unrest and creation of a  fertile breeding ground for extremists (2) Talented and skilled youth will keep migrating (3) Unskilled youth will keep manning the restaurants and shopping malls of Indian cities.

 Finally I would like to conclude by saying that Businesses need to remember the words of Adam Smith who said ”No society can be surely flourishing and happy of which by far the greater part of the numbers are poor and miserable”.  And the policy makers and opinion makers need to remember that economic development is about raising the productivity of people. The more developed a nation, the higher is its per capita GDP. With higher GDP upliftment of the society and welfare is a reality.

Policies cannot remain need based without linking to productivity.

 

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September 19, 2016

New Delhi, Sept. 16: Indian government scientists who set out to help inferior teas find a market have concocted an unusual brew: tea-wine, a drink that combines the features of tea with the flavours of alcohol.

But bureaucratic bottlenecks in the pursuit of manufacturing alcoholic drinks in India or uncertainty about the market may allow a tea company in Mozambique to procure the tea-wine technology and sell the drink in Africa before domestic sales in India.

The scientists at the Institute of Himalayan Bioresource Technology (IHBT), a Council of Scientific and Industrial Research laboratory in Palampur (Himachal Pradesh), will next week meet representatives of a Mozambique tea company that wants to acquire the technology to sell the drink in Africa.

The tea-wine from the IHBT contains catechins, the natural anti-oxidants found in teas, and seven to 12 per cent alcohol generated through yeast-triggered fermentation of local fruits, IHBT director Sanjay Kumar said. Several varieties of the tea-wine may be produced, depending on the fruits used in the process.

"This is primarily an attempt to add value to otherwise un-remunerative low-grade teas," Kumar said. The idea emerged at a time when plantations in Himachal's Kangra region faced labour shortages and delays in plucking of tea shoots can affect the quality of the leaves.

Tea is a labour-intensive crop and the quality of tea depends critically on when the shoots are plucked. Delays of just two or three days in plucking produces less succulent overgrown tea shoots that can severely affect the processing of black tea, lowering tea quality, and fetching poor market prices.

"Some plantation owners in Kangra wanted to sell their land and give up," said Ashu Gulati, a senior plant biologist at the IHBT who led the tea-wine project. "We know that grapes are fermented for wine, so we wondered why we couldn't combine tea with fruits and berries with other health properties."

Gulati and her colleagues who initiated the project about five years ago developed the tea-wine concoctions in their laboratory, tested them to determine that they were free of microorganisms or other contaminants, and offered them to visitors to the laboratory.

"People who tasted the drink liked it," said a senior scientist at the IHBT. The scientists even bottled their experimental produce and labelled it "Kargil Sepoy" after members of the armed forces who had tasted the drink delivered favourable comments.

The scientist said private food processing companies in Himachal Pradesh and Maharashtra have expressed interest acquiring the technology from IHBT, but appear to be stuck in the process of obtaining the licenses for manufacture and sale of drinks containing alcohol.

 

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September 4, 2016

We have to thank Shamol Ghosal for sending this article

 

August 20 2015

THE TEA WORKER

A heated debate is going on in India whether or not the tea worker is paid
‘minimum wage’ as prescribed by the annals of Government. The employers state vehemently  that they are doing their best on the tripartite level on a platform which saves them from the “Minimum Wages Act" by way of an addition of other fringe benefits to the mutually agreed wage.

 

August 9 2015

 

This story is thanks to Shamol Ghosal and Robin Humphries

 

 KENYAN TEA FACTORY INNOVATES TO FIGHT CLIMATE CHANGE

 

Anthony Langat 

 

Tea pickers: Photo: Wikimedia

 

THIKA, Kenya, August 3 (Thomson Reuters Foundation) - The first thing that strikes you as you enter the Makomboki Tea Factory is the air. It's clear, absent of the dark smoke that billows from the boilers of Kenya's other tea factories.

 

Of the 66 tea factories under the management of the Kenya Tea Development Authority, Makomboki is the only one that doesn't use firewood Of the 66 tea factories under the management of the Kenya Tea Development Authority, Makomboki is the only one that doesn't use firewood in the processing of its tea.

 

Instead, the factory has switched to a greener, cheaper fuel: briquettes made of biomass byproducts that would otherwise be treated as waste.

 

Deep in central Kenya's hilly and fertile tea-growing Muranga county, Makomboki employees feed the factory's boilers with briquettes of macadamia, cashew and rice husks mixed with sawdust.

 

"We have not used a single cubic meter of firewood in the last six months and we are excited about that," said factory manager John Gitau.

 

In 2010, the International Trade Centre started a training project aimed at teaching Kenya's tea producers climate change mitigation techniques.

 

Inspired by what they learned, Makomboki's board of directors decided to shift their fuel source from firewood to briquettes. Since then, the factory has scaled up its use of alternative fuels and weaned itself of its dependence on firewood.

 

Makomboki makes its briquettes thanks to a project designed by Living Earth Foundation, a UK-based charity working to tackle the energy challenge facing Kenyan tea producers. Funding for the Makomboki briquette production plant was provided by the European Commission and British retailer Marks & Spencer, which buys tea from the factory.

 

The husks for the briquettes come from other factories within Muranga and Kiambu counties and the sawdust from mills near Makomboki.

 

"Saw millers actually have a problem finding ways to dispose of their sawdust," said Gitau. "We are helping them get rid of their waste."

 

According to Gitau, in the six months that it takes the factory to produce around 2.5 million kilograms (5.5 million pounds) of tea, their boilers used to consume up to 10,000 cubic meters of wood - the equivalent of 30,000 trees.

 

By swapping firewood for sawdust and briquettes, he said, Makomboki alone will have saved 60,000 trees in the course of a year.

 

"If the same practice is replicated by all the factories in Kenya, we will have saved a lot of trees and contributed to a better environment," said Gitau.

 

BETTER FOR FACTORIES AND FARMERS

 

Mary Njenga, a post-doctoral fellow of bioenergy at the World Agroforestry Center, hails the use of sawdust in the making of fuel briquettes.

 

As long as the sawdust is a byproduct of a sustainable timber system - in which new trees are planted to replace those that are felled - burning sawdust in a factory is preferable to saw millers setting piles of it alight in the open.

 

"Many timber producing areas burn sawdust (to get rid of it) but tea factories will be able to turn the sawdust into a resource," she said.

 

According to Njenga, burning sawdust in a boiler releases fewer carbon emissions than if it were burned in a field.

 

"The temperatures inside the boilers of tea factories are so high, they are able to more fully burn the particulate matter and the carbon dioxide so that little is released," she said.

 

Makomboki manager Gitau says tea factories that continue to use firewood can't ignore their own roles in the adverse effects of climate change. He points to an unusually long dry season that hit tea crops this year.

 "During this year's dry season, we are experiencing problems we have never before," he said. "Tea bushes are drying up and farmers have to cut them and it could take up to three years before they are ready to be picked again."

 The move away from firewood also makes financial sense. Gitau says that swapping to fuel briquettes has reduced Makomboki's energy costs by nearly half.

 The factory used to spend 55 million shillings ($542,000) per year on firewood, but the introduction of briquettes has cut the energy bill to 30 million shillings ($295,600).

 

According to Gitau, word is spreading on the benefits of briquettes. Delegations from other factories have visited Makomboki to learn more about the alternative fuel, he said. And his hope is that they, too, will follow his factory's lead.

 

"We want to run a sustainable business here," said Gitau. "I want my son to be a factory manager some day, and if everyone conserves the environment, that will happen." (Reporting by Anthony Langat; editing by Jumana Farouky and Laurie Goering :; Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, women's rights, trafficking and corruption. Visit www.trust.org/climate)