The True Price of Tea from Kenya

In this study the external costs of the tea supply chain (smallholder cultivation in Kenya) were investigated to inform decision making for IDH’s tea program. The external costs of conventional green leaf were compared to green leaf grown by smallholder farmers active in the Farmer Field School (FFS) program.

One barrier to reducing social and environmental costs effectively is the lack of quantitative assessments of the size and materiality of the various environmental and social externalities of tea production in Kenya. Such information is needed to make well informed decisions and steer future interventions. Moreover, it is valuable to know to what extent FFS training reduces the externalities of tea cultivation, and how standard-setting and other organisations can allocate their resources most efficiently.

This study aims to contribute to these challenges by measuring and valuing the environmental and social externalities of the tea supply chain and by comparing conventional tea cultivation to FFS farm tea. "An FFS farm” refers to a smallholder plantation owned by a farmer enrolled in the FFS program. Central to this training is transfer of knowledge and tea management practices in order to increase green leaf productivity, diversify activities and optimize input use (LEI Wageningen, 2014). The sustainability of tea production is improved by increasing the adoption of Good Agricultural Practices (GAPs). FFS training is led by KTDA staff or already graduated FFS farmers assisted by the KTDA (LEI Wageningen, 2012). All FFS farms have as well achieved Rainforest Alliance certification. "A conventional farm” refers to a farm that is owned by a farmer who has not attended the Farmer Field School.

True pricing
True pricing can be used to measure the impact of an intervention by comparing the external costs off armers with those of a real or a modelled control group (the option scenario vs the reference scenario). Depending on data quality, claims can be made as to whether and how the intervention creates value by increasing benefits or reducing costs. The total effect of the alternative scenario can be broken down into sub-effects. Based on this knowledge, the alternative scenario can be evaluated and improved. As mentioned before, measuring impact of interventions requires a specific data set to be available.

Click here to read the joint report by IDH and True Price.

Tags: Agriculture and food | Supply Chain Management | Natural Resources | Case Studies

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