Commodity Chain Assignment

Unilever Tea Kenya was known from 1922 to 2004 as Brook Bond Kenya. The company has tea estates in Kericho and Limuru. The headquarters of all Unilever tea operations is in Nairobi. It has its distributors in every major town in the country. In addition, it has dealers abroad who deliver the tea to its international consumers. Unilever’s employees are more than 20,000 people, who have over 80,000 dependants. Its mission is to deliver its high quality tea in hygienic and presentable packaging. The company owns twenty tea estates and eight manufacturing factories. According to their website, the company’s contribution to the economy has increased from Kshs. 0.2 million in 1972 to Kshs. 5.5 billion in 2007 (Key Business Contacts in Kenya, 2005). This paper aims at investigating the commodity chain of the Unilever Tea Kenya Ltd.

Unilever Tea is a public company and was listed in the Nairobi Stock Exchange (NSE) in 1972. Its financial review from 2002 to 2006 shows that its profits have been falling from Kshs. 124 million in 2002 to Kshs. 62 million in 2003, rising in 2004 to Kshs. 360 million and falling in 2006 to Kshs. 52 million. The company has and maintains educational facilities within its estates for workers’ dependants. This benefit is non-discriminatory concerning the employment status of a worker. Unilever lays claim to twenty primary schools, secondary schools, and nurseries. It also provides full university scholarships for bright students in the community where it operates.

In addition, the company provides housing and water to their workers. In each of its estates, a section of the land is allocated to the provision of housing for workers. Certain sections are also allocated to the different cadres of employees. On average, the company spends over Kshs.100 million on medical provision for its workers. It has dispensaries and clinics in each of their tea estate. Nurses and medical officers who cater for minor illnesses operate these clinics. There is a theatre for surgical procedures, maternity care, and laboratory services. It also runs a comprehensive HIV/AIDS program (Standard Media, 2011).

Socio-Economic and Environmental Issues in Kenya

Rising population, urbanization, and improved living standards compound the country. In line with achieving the Millennium Development Goals, the country has shown significant progress. The goals are poverty reduction, universal primary education, gender equality, and eradication of HIV-AIDS and other tropical diseases. Other goals are women empowerment; reduction of maternal mortality, environmental sustainability, youth employment, and regional partnership building (UNDP Kenya, 2007). The most daunting challenge is the lack of employment, especially for youth. The short supply of new jobs seems likely to become an increasingly serious problem with direct repercussions for development at the national level.

The percentage of the population living below the national poverty threshold has reduced significantly between 1990 and 2001. Available data indicate that in 2001, between two and 7 percent of the total population of Kenya was suffering from hunger. In reducing child mortality, the country’s target is to decrease the mortality rate of under-five by two thirds till the year 2015. Another target is to decrease the mortality rate of mothers by 75 percent before the year 2015. The greatest challenge is the lack of access to reproductive health infrastructure and information, particularly in rural areas (United Nations, 2008).

The environment forms the bedrock of economic and social development. Environmental conditions in Kenya are highly variable in space and time. Environmental degradation exacerbates poverty and undermines the economic progress envisioned by Vision 2030, the country’s long-term development blueprint. A range of strategies characterizes Kenya’s environmental management at the various levels. Despite recent efforts to harmonize these approaches, environmental policy management remains largely incoherent. The diverse and complex environmental challenges that prevail call for a comprehensive national environmental policy. A shift in environmental management towards controlling human behavior and instituting policies for transformation is gaining impetus in order to achieve a balance between the country’s development needs and sustainable management of the environment (Brand Kenya, 2012).

Six sectors have been identified in Vision 2030 as having the greatest potential to propel the country to the next level of economic development. The sectors make up about 57 percent of the country’s GDP and account for approximately half of the country’s total formal employment. The sectors include agriculture, tourism, wholesale and retail trade, manufacturing, business process outsourcing and financial services (Brand Kenya, 2012).

 Agriculture is the dominant sector in the Kenyan economy. It employs three quarters of the labor force and contributes 30 percent of the country’s revenue income per annum. The agricultural policy in Kenya revolves around increasing productivity and income growth, especially for smallholders. It does this by enhancing food security and equity and emphasizing on irrigation to introduce stability in agricultural output. In addition, the government encourages commercialization and intensification of production, especially among small-scale farmers (Kabubo-Mariara, 2006).

Kenya is one of the world’s leading growers and exporters of quality tea products, which are in high demand in various countries all over the world. Tea is a chief foreign exchange earner for the Kenyan economy besides coffee, horticulture, and tourism. The tea is processed and packed by the Kenya Tea Packers company limited. Tea growing in Kenya is done in the highland areas, which have enough rainfall and low temperatures throughout the year - the ideal climate for tea growing. These areas are mainly found around the Rift Valley parts of the country. Growing takes place throughout the year, and the tealeaves are harvested every 7 to 14 days (Wal, 2008).

Issues Connected with the Production of Tea

The main challenge encountered by the tea workers is posed by the deplorable state of housing provided by companies. Tea estate companies normally allocate a one-roomed house, which is to be shared by two casual workers. The situation becomes worse when the production is high and more laborers are employed. Then, up to six workers end up sharing the one-roomed house. These housing conditions are pathetic, and the sharing of houses causes conflict. Workers use one kitchen, share the same bed, same table, and same chairs. They are placed in circumstances where they are forced to do everything together for convenience. Their houses leak and have not been painted for a number of years.

Sexual harassment is a daily nightmare for workers in tea plantations. Women pluckers who refuse sexual advances of the supervisors become targets for harassment. Most supervisors are male, and some of them demand sexual favors from the women workers. This has led to increased cases of HIV and AIDS among the people. This is because the supervisors have unprotected sex with multiple partners who seek their favors. To curb this issue, companies have set up gender committees, which are mandated to handle cases of sexual harassment. Other companies have gone a step ahead to produce codes of business principles (Wal, 2008). The principles govern employee relations and clearly spell out the reporting mechanism, which employees can use if they are aggrieved.

Child labor is rampant in tea production in the country. School going children, especially those from poor backgrounds, are a cheap source of labor. Most of them abort their classes to go work in the plantations and the payments they get go towards school fees and new uniforms. However, some socially responsible companies only allow people over the age of 18 to work in their tea estates. They also have child helper policy, where children above the age of 14 years are allowed to help their parents pluck tea during school holidays (Third World Network, 2009).

Tea pluckers are paid their monthly wages using the piece rate system. This simply means that the pluckers are paid according to the amount of tea they have plucked. Most tea estates have set a minimum amount of tea that has to be plucked in the high season. The target is USD 0.093 per kilogram. Using this target, a plucker is entitles to receive USD 3.12 per day (Key Business Contacts in Kenya, 2005).

The environmental impacts on the industry are considerable. There is significant loss when forests are turned to tea plantations. Tea plantations have resulted to logging for firewood to process tea. The chemicals that are used to kill pests and enhance growth have a negative impact on the environment (Wal, 2008). Most pesticides are sprayed, hence polluting the air and reducing soil biodiversity. These chemicals are known to cause harm, not only to the surrounding environment, but also to people who work in tea plantations. When inhaled, the fumes cause health complications to the workers health.

Tea Transportation

Tea manufacturers in tea growing regions benefit from the good transport system. The excellent tarmac roads connect the tea plantations and the manufacturers. From the manufacturers, the product is then transported to Kisumu International Airport, where the product is transported and delivered to tea dealers in the United States. The airport is less than an hour’s drive.

The vehicles used to transport tea from the plantations and then to processing companies have a negative impact on the environment. They are the major reason of air pollution. These vehicles produce carbon monoxide fumes that have an adverse effect on the environment. The fumes tamper with the ozone layer of the atmosphere, which then leads to the environmental crisis such as global warming. The planes used to transport tea abroad have the same effects as described above.

Tea from Kenya is famous for its distinct taste and rich flavor. The drink is natural and contains no chemical additives (Kericho-county.org, 2010). Its dark color and a strong aroma characterize high quality tea. Personally for me, taking tea daily is necessary. The distinct flavor is addictive, and in addition, the tea is believed to cure minor ailments, such as headache. It tops in Africa and it is third in the world. Besides, Kenyan tea is blended with tea brands from other countries such as Sri-Lanka to give them the desired flavor and special distinctive taste.