Published on 18/11/2024
Ugandan tea farmers grappling with collapsing global tea prices, have made an urgent plea for a UGX126 billion bailout to save their livelihoods.
Onesimus Matsiko, Chairman of the Tea Outgrowers Association Uganda Ltd, painted a grim picture before Parliament’s Trade Committee. Without intervention, abandoned tea gardens and mounting debt threaten to uproot entire communities. Farmers face losing not just crops but also homes and land used as collateral for loans.
“We request Parliament to direct the Microfinance Support Centre to allocate UGX31.5 billion to finance tea outgrowers. This funding would reduce farmers’ dependence on processing factories and allow them to supply green leaf while waiting for the cash cycle to complete,” said Matsiko. The requested amount represents 25% of the UGX126 billion identified as essential working capital for Uganda’s tea processing sector.
Matsiko explained that half of this amount is needed to procure green leaf, of which 50% is sourced from out growers. Without this intervention, several tea factories risk foreclosure due to unmanageable debt.
The association further urged the government to expedite the enactment of a Tea Policy to establish regulatory standards and improve the quality of tea leaves, addressing a disparity where Ugandan farmers earn less than their counterparts in Kenya and Rwanda. Matsiko noted, “Uganda’s low-grade tea earns less than $1 per kilogram on the international market, compared to over $2 in Kenya and $3 in Rwanda, due to poor regulation and quality control.”
To address quality issues, the association called on the Uganda National Bureau of Standards (UNBS) to implement enforceable standards for green leaf quality, which would compel processing factories to purchase only high-standard tea leaves, thereby improving market rates for Ugandan tea.
The Tea Outgrowers Association emphasized the urgent need for fertilizer subsidies to help tea farms recover. They proposed a phased subsidy: 75% in the first season, 50% in the second, and 25% in the third, to gradually establish a self-sustaining fertilizer program. Matsiko said, “The total cost for these subsidies across Uganda’s tea acreage stands at UGX41 billion.”
Additionally, the association requested further financing to support processing factories in replacing outdated machinery and adopting new technologies, as aging equipment diminishes leaf quality, reducing farmers’ returns.
In response, MP Mbwatekamwa Gaffa (Igara East) expressed disappointment with the government’s delay in addressing the crisis, which has been worsened by rising fertilizer costs. Gorrethe Namugga (Mawogola South) criticized the lack of a comprehensive tea policy, pointing out that without regulation, it’s challenging for the government to provide consistent support.
Despite recent negative media coverage of Parliament, MP Elijah Mushemeza (Sheema South) commended the tea farmers for trusting Parliament with their concerns, acknowledging that the global tea market crisis, not just domestic factors, has impacted Uganda’s tea sector.
According to documents presented to the committee, Uganda’s tea industry has grown from 21,000 hectares in 2001 to 50,000 hectares, with over 70% of tea farms operated by outgrowers. However, productivity remains low, with yields averaging 1,600 kilograms per hectare, well below the sector’s potential.
