Profile: SIREET OEP, KENYA

Sireet Outgrowers Empowerment Project Company Ltd (Sireet OEP) is an organisation of small-scale tea growers who also own a tea factory.

About Sireet OEP

Sireet OEP tea is used in more than 40 widely available blends from companies including Cafédirect and Traidcraft and Own Label Fairtrade tea from The Co-op, Marks & Spencer, Sainsbury’s, Tesco, Waitrose and Asda.

Background & Structure

The forebears of Sireet OEP members were squatter labourers on farms owned by European colonial settlers. The farms developed into tea estates and after independence in 1963 the squatters were allocated parcels of land on the edges of the tea estates that employed them. They gradually planted tea to sell to the estates and in 1997 formed an outgrowers’ association to represent their interests.

In 2006 the association was legally registered as Eastern Produce Kenya Outgrower Empowerment Project Company Ltd to work on behalf of its then 700 members in areas such as price negotiations, green leaf transport and bulk purchase of fertilisers. The name was changed to Sireet OEP in August 2011 and membership has grown to 8,017 farmers, 23% of them women.

The farmers are located in six production zones spread across the vast Nandi Hills region of Rift Valley Province where they supply green leaf exclusively to six tea factories within their catchment areas owned or managed by EPK. Tea is the farmers’ main source of cash but many are also involved in dairy farming, horticulture and poultry farming. Because of their small farm sizes – just 0.67ha on average – it is difficult to earn enough from tea to cover their families’ needs.

Sireet OEP is managed by an elected board with representatives from each of the six tea factory catchment zones. The 47-member Zonal Committee has members from each zone, including representatives of tea shed committees who report directly to their local members.

As the organisation grew, members discussed ways in which capital investment could improve their incomes and agreed that ownership of a tea factory would enable them to develop business capacity and maximise farmers’ earnings through value addition.

In 2006 Sireet OEP purchased Sireet Tea Estate and Factory which was being sold by EPK. The business employs 240 workers and includes 400 ha of mature tea, a factory with the capacity to process 100,000 kg of green leaf a day, commercial forests, and a school, dispensary and staff housing. A seven-year loan was taken out for the purchase, with repayments part-funded by the Fairtrade Premium, and the final instalment was paid in August 2012. Management, processing and marketing continue to be carried out under contract by EPK.

‘Tea is the farmers’ main source of cash but because of the small farm sizes, it is difficult to earn enough from tea to cover their families’ needs. The Fairtrade Premium was first channelled into the phased purchase of Sireet Tea Factory and is now being invested in new projects mainly focusing on health and sanitation, water supply and education’.

Production & Sales

Members of Sireet OEP own a total area of 5,810ha with an average farm size of 0.72ha. The favourable climate allows tea to be grown and harvested year-round. Freshly picked green leaf is delivered to 220 tea buying sheds where it is collected by EPK and transported to the nearest factory for processing, along with green leaf grown on EPK’s own tea estates. The tea is then transported to Mombasa auction or sold directly to importers. Farmers are paid directly by EPK in two stages – a basic monthly payment plus an end of year payment based on actual tea prices achieved over the year.

It takes approximately 4.3kg of freshly picked green leaf to make 1kg of the familiar black tea found in packets on supermarket shelves. Members’ production of black tea has increased from 3,600 tonnes in 2006 to almost 9,000 tonnes in 2012. Of this, 208 tonnes were sold as Fairtrade – just 2.34% of total production.

Fairtrade

Sireet OEP was Fairtrade certified in 2006. The Fairtrade Minimum Price for tea from Kenya is $1.70/kg for auction sales and $1.80/kg FOB (direct sales to importers). Producer organisations receive an additional Fairtrade Premium of $0.50/kg to invest in business improvements and community development. When the auction price is higher than the Fairtrade Minimum Price, as they have been in recent years, the producers receive the auction price plus the Fairtrade Premium.

Fairtrade Premium Projects

Members organise local meetings to discuss ideas for premium projects. Proposals and cost estimates are forwarded to the Premium Committee for evaluation and prioritisation according to available funds. The committee has 11 members, made up of five directors and a representative from each of the six zones. At the AGM, the committee notifies members of approved projects, budgets and work plans, and releases funds to the successful bidders. A committee oversees the management of each project while an Independent Control Committee monitors and audits premium projects to ensure transparency.

Between 2007 and August 2012, 70% of the Fairtrade Premium was channelled into the phased purchase of Sireet Tea Factory. The premium is now being invested in new and ongoing projects mainly focussing on health and sanitation, water supply, and education.

Recent projects include:

Education (support to eight secondary schools):

• Construction of two classrooms, three laboratories, school kitchen, dormitory and toilet block for 94 girls, housing unit for teachers.
• Purchase of desks and chairs, energy-saving stoves for kitchens, rain water harvesting equipment.
• Bursaries to pay school fees for members’ children.

Healthcare (support to eight dispensaries):

• Construction of maternity wing, laboratory and three staff housing blocks.
• Renovation of dispensary building; roof and ceiling repairs.

Water Supply

• Construction of water tanks to store and pipe water to three villages and for farm irrigation.

Business Development

• Purchase of trucks and tractors to transport members’ tea to Sireet Tea Factory.
• Purchase of commercial land and construction of office and retail premises for rental income.