21 November 2004

Ethiopia: Tea Waiting for Promised Land

Kebebush A'uto was 19 and her parents were worried that the marriage of their daughter was long overdue. In the Sheka Woreda, Sheka Zone, of the Southern Nations, Nationalities and Peoples' Regional State, 658Km from Addis Abeba, where 55,000 people live, the practice is for girls to marry by the age of 15. Her parents had been looking for a husband, and she was waiting for her fate with the traditional acquiescence.

"After I completed high school, I was waiting for the husband that my parents would find for me," she told Fortune last week.

Little did she know that her life would take a dramatically different path. Something new happened in the area before a husband came to claim the ready hand of Kebebush.

East Africa Agri Business appeared in Sheka Woreda bringing the first large investment project to the area. It was going to grow tea. Kebebush, who had just taken her grade 12 exams, found a job at the new tea farm in her village, Chewaka, with a daily wage of 12 Br.

East Africa Agri Business, one of the seven sister companies of East Africa Group Ethiopia Ltd, says it has invested 50 million Br in its 500ht Chewaka Utto Tea Farm, including the processing plants bought from India, Indonesia and England at a cost of 10 million Br.

It is the second such venture in commercial tea farm in Ethiopia, next to MIDROC's Agri-CEFT. MIDROC paid 27 million dollars in February 2000 to acquire the state owned farms of Wushwush and Gumero from the Ethiopian Privatisation Agency. Together with what East Africa develops, the two private companies grow tea on an aggregate of 2,600ht of land.

This size is, however, minuscule compared to the six million hectares that the defunct Coffee and Tea Authority said is suitable for tea growing. The Sheka Woreda, where Kebebush resides, accounts for 10pc of this potential, although the nature of soil and the weather help farmers grow premium quality tea, according to Benjamin Bett, a Kenyan expert on tea farming.

Realizing this potential, the Sheka Woreda Administration agreed to provide 3,435ht to East Africa in 1996, and the Company started its first phase operation on 400ht. Over the years, it could only get 100ht more. Company sources now say that they have encountered problems with the Woreda's new administration to obtain the remaining hectares.

Buzuayehu Tadele, managing director of East African Group Ethiopia Ltd, said that if the plot that was originally allowed by the previous administration had been given, it would have covered 1,500ht of land with tea seedlings by now.

On Sunday, November 14, 2004, State Minister of Agriculture and Rural Development Getachew Teklemedhin, accompanied by Assefa Tegneh, head of the Coffee, Tea and Spice Development Department visited the Chewaka Utto Tea Farm in order to see how the Company's land problem could be addressed.

"The new administration that took over after the reform in 2002 told us that we would not get the whole lot which had previously been allowed, but that we would get a limited amount year on year," said Buzuayehu to the visiting State Minister.

The Administration had promised to give East African 100ht in December 2003, according to Buzuayehu, but that has yet to happen. He claims this has far reaching implications for his Company's initial target.

Kebebush and 1,499 other employees paid by East Africa had grown tea seedlings in a nursery to be transferred to the promised 100ht. The Company says that if the seedlings are not transferred to the farm soon, they will be thrown away as they will no longer be good enough, and this will incur a loss of 2.1 million Br.

A hectare of land needs 14,000 seedlings, according to information from the Coffee, Tea and Spice Development Department. Growing seedlings in a nursery costs up to 21,000 Br per hectare.

"The local farmers claimed that the land belonged to them," Tilahun Kameto, the new Woreda administrator, said promising that East African will get its plot soon. "It took time to convince these farmers. Now that has been done, the Company will receive its plot in the near future."

That is little consolation for the director of East African Group, who claims that he and the regional administration had heard the same thing over and again for the whole year.

Buzuayehu suspects the problem lies somewhere else. The Administration wants the East African Group to leave the farming part entirely to the local farmers; buying and processing the tea at its plant in the area. He said that the Administration also raised another excuse, that of protecting the forest of the Zone from deforestation for the sake of growing tea.

"A company that aims to export tea needs to have 1,500ht of its own plot covered by tea to ensure continuity to the supply chain," Buzuayehu said. "Whether we like it or not, we are going to have to supplement our supply by using out-growers."

Almost all of the 1,000 temporary employees, including Kebebush, came from the woreda itself. The remaining have come from four neighbouring woredas. Kebebsuh, now 23 years old, started working there three years ago. Since then, her daily pay of 12 Br has been slashed to seven Birr. She was not bitter about her salary cut as she was comforted when the Company let her join the band of 500 permanent employees.

Once she felt secure about her employment status, and no longer needed her family to arrange her marriage, she joined a 50 Br iqub, a traditional community based saving cooperative.

Nor are her parents displeased with this. She told Fortune they do not want to lose the support of their daughter when she becomes married to someone. The last time she got the iqub money, she bought two lambs for her family. This time she wants to buy them cattle, adding a means of survival to the family that has none so far.

"I do not want to get married until I have provided something for my parents' future sustenance," she said.

Buzuayehu wants the government to give the tea sector as much emphasis as it does the flower sector if it really wants to change the lives of people like Kebebush. He claims that if the local administration lets him get the plot and he subsequently manages to expand it, he will be able to increase the number of employees he now hires by 64pc.

The Chewaka Utto plant has the capacity to produce 10,000tn of tea a day, making a kilo of finished tea from 4.5kg of green tea. East African Group wants to export all its output to the Middle East.

Ethiopia exported 1,782tn of tea, earning a mere 2.1 million dollars of foreign currency, in 2003/2004, according to a report from the Ministry of Trade and Industry. This sounds rather small when compared with the number of years since the country first started tea production in the 1920s. In 1974, the country's production was only three tonnes, according to this year's joint report by the United Nations Conference on Trade and Development and International Chamber of Commerce.

Compared to neighbouring Kenya, the figure looks absolutely pathetic. Kenya grows tea on 130,000ht of land, making as much as half a billion dollars from the sector in any given year.

No wonder then East African Group has hired Kenyans on five-year management contracts to manage its tea business. Benjamin is one of these managers, who seemed to have been caught by surprise when he saw the potential of Sheka Woreda.

"All work needs a nucleus to grow," said State Minister Getachew following his one-day visit. "East Africa is one such nucleus. In order to draw more investors to the area, we need to support the beginners."

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