The Thyolo Dam project is part of Malawi Tea 2020’s ambition to create a more profitable tea sector
Satemwa, a small family-owned business in Malawi, is one of the most innovative tea producers in the country, producing specialist teas and quality coffee, as well as several smaller specialist crops through partnerships with neighbouring smallholders. However, decreased rainfall over the last 20 years has resulted in lower yields, threatening the financial viability of Satemwa, local smallholders, and other tea estates in the area.
The company and its neighbours quickly realised that in order to maintain profitability and sustainability, they needed better irrigation. A reliable water source would allow Satemwa’s factory to operate at full capacity throughout the year, not just during the rainy season. Moreover, creating a sustainable irrigation solution would benefit not only the current occupants of the land — Satemwa and its smallholder partners — but future generations as well.
Thyolo Dam: a sustainable solution
Malawi Tea 2020 is helping to make this vision for sustainable irrigation a reality through the creation of the Thyolo Dam on the Msuwadzi River. The dam will provide the water needed to improve the quality and quantity of tea produced in the area, and help producers remain viable, competitive and less dependent on rainwater.
A joint partnership between IDH, Satemwa and AgDevCo, an agricultural investor funded by the UK’s Department for International Development (DFID), the dam is expected to provide irrigation to a number of smallholder farmers in the Thyolo region, in addition to the Satemwa tea estate.
The Thyolo Dam project will help fulfil a key objective of the Malawi Tea 2020 programme: to create a more profitable tea sector.
Protecting the environment
To inform the construction process for the dam and to assess its potential impact on estate sustainability and smallholder growth, IDH funded an Environmental Impact Study. This study revealed that the proposed dam project will be viable and will have a minimal effect on the surrounding environment and the fish population of the Msuwadzi River.
The proposed dam will have a capacity of 2,700 megalitres, generating sufficient water to irrigate 900 hectares (ha) of tea. Around 60% of the water will be allocated to the smallholders, providing irrigation to at least 1,000 households (540 ha), and 40% will be used by Satemwa’s processing plant. The project will initially by governed by AgDevCo and Satemwa, with the intention of bringing in smallholder representation. AgDevCo will seek a DFID grant that will fund 60% of the dam’s costs, with Satemwa providing 40%.
With better irrigation, Satemwa also plans to support more smallholders by establishing outgrower schemes with farmers in the area. This will enable the smallholders to grow tea and other crops to be sold by Satemwa. The company will also provide farm and irrigation management services as part of the agreement. This is an expansion of the existing agreement that Satemwa has with 3,000 smallholders who grow tea for the Yamba Tea Brand, which exclusively sells smallholder-processed tea. Over the last three years, IDH has supported Yamba’s marketing efforts, helping to increase its output by 100%.
In the future, the outgrower scheme will be extended to an additional 455 ha of smallholder land upstream and downstream of the dam, benefiting another 900 farmers. The dam footprint would occupy an estimated 20 ha of Satemwa land and 14 ha of community land within the estate. The company is already in discussions with key stakeholders representing affected community members, to ensure that they are relocated and/or compensated accordingly.
By improving the viability of tea production in the area, the proposed dam will also help Satemwa retain its large workforce even in the face of climate change. The number of working days for existing employees is expected to increase due to the additional yields in the dry and colder seasons. This increased productivity will result in more earnings for the workers, helping to improve their quality of life.