The Satemwa Estate in the Shire Highlights of Malawi standsat a crossroads. As a family run estate, the orderly rows of green tea busheswith Mount Mulanje standing proud in the distance have changed little since theKay family founded the estate in 1923.
However, the serene scene masks a period of flux for this third-generationestate and the wider tea industry in Malawi. The industry is facing multiplechallenges with potentially significant impacts on those who depend on theestate for their livelihoods.
The impacts of climate change on the tea harvest arebeginning to reveal themselves and deforestation places enormous pressure onthe crop. Satemwa recorded their first ever winter rains failure in 2012,followed by further failures in 2015 and 2017. The investments made in moreresilient tea bushes today only pay back in 2030 so it is imperative to beagile and innovate to ensure survival. For Satemwa, that means diversification.
Satemwa Managing Director Alexander Kay explains: “Tosurvive, we have to diversify into tourism and higher value products. There isno further land we can acquire so the opportunities now are for vertical growth– high value products, irrigation, new plants. Tourism is good for business asit allows us to sell packaged products directly including speciality teas andgreen tea.”
Green tea presented an interesting opportunity for Satemwa.Historically, Malawi estates only produce black tea, but demand has beenslowing. Green tea by contrast is growth market but European tea companies canstruggle to meet the demand from Southeast Asian countries alone becausepesticide usage is typically high. They need a supplier that is almostpesticide free to meet the European and North American market standards. AsMalawi enjoys a drier climate, pesticide use is lower, making it an attractive newprospective source.
But innovation means investment and risk. Fortunately forSatemwa help was at hand through the Malawi Tea 2020 programme, amulti-stakeholder partnership which aims to improve the competitiveness andsustainability of the Malawian industry. The Ethical Tea Partnership (ETP), oneof the driving forces behind the programme, brought together two of itsmembers, German tea company OTG and tea specialists Van Rees to assist Satemwaand the opportunity presented.
Stefan Feldbusch is Head of Buying at OTG: “We were lookingfor a supplier of green tea to replace some of what we buy from China. Satemwawas Certified and was already a reliable partner in black tea – and like us, itis also a family business so a connection was there too”.
While black tea and green tea are derived from the same teabush, diversifying into green tea carries risk as significant investment in newmachinery is necessary. It was important therefore that OTG was able to providea stable contract to Satemwa for the ongoing supply of green tea.
“We confirmed that we were able to pay more for green thanblack tea“ says Stefan Feldbusch. “We also committed ourselves to a one-yearcontract and higher prices so there is security for Satemwa. This money can beinvested in the machinery needed to produce green tea.”
Paying a fair price for tea is part of OTG’s commitment toMalawi Tea 2020. It was here that OTG teamed up with fellow Malawi Tea 2020partner, Dutch trading house Van Rees, to negotiate the contract with Satemwa.
Jan Bas van Veelen is General Manager, Malawi for Van Rees.He explains why a tripartite agreement between the producer, the buyer and thetea company is necessary to ensure a reliable supply chain.
“Green tea commands a higher price, particularly fromcountries like Malawi where pesticide usage is low. Speciality tea is risky forestates as people don’t buy it by the container load, so this kind ofrisk-sharing makes the production of green tea possible.”
OTG’s early support of Satemwa’s entry into green tea wasvital, as Alexander explains.
“It took a while to learn how to produce green tea. Ifthere hadn’t been demand for it from OTG, we wouldn’t have had the confidenceto do it. We sent the first batch to Van Rees. They backed us and we were givena contract which de-risked the venture.”
The result is a mild, non-astringent green tea that nowconstitutes up to 10% of Satemwa’s volume per year. It is more costly toproduce than black tea as it uses more energy – a scarce resource in Malawi -but it receives a premium.
The Kay family is supporting 1,700 permanent workers on theSatemwa Estate in an area of chronic unemployment. Alexander Kay is lookingforward to new methods and initiatives that can sustain the whole estate.
“The biggest impact we can have is to be a responsible employer and put money in people’s bank accounts. We need to be responsible fair payers. The thing I’m most proud of is we are still standing. We have stood the test of time.”
Author Sarah Roberts is the Executive Director of the Ethical Tea Partnershp.