We are building the Tanzanian tea sector in partnership with the Wood Family Trust, government bodies and the private sector. The Chai Project aims to expand tea cultivation, increase productivity, improve quality and boost returns to smallholders.

Tea is a high impact sector in Tanzania.  It is the fourth largest export crop and more than 30,000 smallholder farmers collectively produce a third of the country’s output.  It is harvested all year round and provides a regular, dependable source of income, lowering farmers’ vulnerability to extreme weather shocks.

Despite this, the sector faces significant challenges.  Research has identified a clear downward cycle within smallholder tea production – factories are not getting enough green-leaf throughput to operate efficiently and keep variable factory costs low, so they are only able to offer low prices to farmers.  For farmers, these low prices mean they are unable or unwilling to invest in raising the productivity of their tea crop, for example by applying fertiliser, thus green-leaf throughput remains low. 

This downward spiral leaves Tanzanian farmers among the lowest paid in the region.  Furthermore, they take a smaller share of the sector’s earnings, receiving just 26% of the made tea price compared with the 75% received by Kenyan smallholders who benefit from greater ownership of factories. 

There are thus significant growth opportunities if the downward spiral can be broken, with clear potential to raise smallholders’ incomes.  Therefore, in September 2009, Gatsby and the Wood Family Trust launched a joint programme - the Chai Project - aimed at transforming the sector. 

An audit of all existing and potential tea growing areas set out the opportunities for increasing output, productivity and quality and confirmed how returns to smallholders could be increased through higher yields, higher prices and, potentially, increased smallholder stakes in factory ownership.

To realise this potential, the Project has launched a challenge fund to incentivise the private sector to tackle specific local constraints through measures such as planting new bushes, providing fertiliser and offering extension services.  The Project is also working with farmers’ associations to strengthen advocacy and organisational skills to better represent their members.  In addition, the Project is working with government bodies to create a road-map for the sector and develop an effective contract farming system with supporting regulation and data collection.  

The Project will continue these and other activities over the coming year.