Tata Consumer Products: A Template for Change

Tata Consumer Products  buys more tea from Malawi than any other tea producing country, bar Kenya. The rich red colour of Malawi teas makes them perfect for a blended tea like  Tetley Everyday blend.

As part of Malawi 2020, TCPL pledged to prioritize purchase of Malawian tea directly from producers or via auction and worked to identify other opportunities to include higher value teas in the sale. In 2019 we bought nearly 6.8 million tonnes of Malawian tea from 6 producers, up almost 50% from the 2015/6 season.

To commit to buy, Malawian teas have to meet required standards. TCPL built closer relationships with producers and shared their expertise and experience to help improve knowledge of crop quality standards.

Several forward contracts were negotiated in the 2019 season: with Eastern Produce Malawi, continuing our 20-year association; with Dhunseri (Makandi Tea & Coffee Estates Ltd) after a 2-year gap; and a first contract with Satemwa Tea Estate.

We have worked with Satemwa and Eastern Produce to explore different opportunities. Several containers of green tea have been bought from both in the last year and Drier Mouth teas, which include grades of tea which would otherwise be neglected, are included in Satemwa’s contract. This will deliver sufficient value to enable the living wage gap to be closed by 20%, according to the programme’s target.

Supporting workers whilst benefiting producers

Buying increased volumes of tea does not necessarily impact workers’ wages.

The sustainable pricing tool developed within the Malawi 2020 programme provided a good structure for pricing discussions, but implementing it was not straight forward.  Guidance on Collective Bargaining Agreements  from the Tea Association of Malawi  states that overpayments should not be passed on as additional wages, so bilateral negotiations between producer and tea company were a  better way forward.  Working together, separate  clauses relating to living wage contributions were agreed and formed part of  contract and sales negotiations. Some relate to incorporating a  living wage within the contract price, others to providing an agreed sum to support worker needs.

A process to verify that additional monies provided are used as agreed and reach and benefit those for which it was intended has been implemented. Monitoring ensures that additional payments are not used as a direct wage top up and are allocated in line with the terms of the collective agreement with workers relating to in-kind benefits.

As part of its purchase agreement with producers TCPL has adopted EXW/CPT where shipping and transportation costs from a pre-agreed destination are borne by the buying company. This takes the risk away from producers and enables invoicing to be made earlier in the process.

Tetley Development Fund :

Beyond Malawi 2020, Tata Consumer Products is committing $1.15 million over the next 5 years as part of its commitment to improving the lives of tea communities. TCPL would like to create a long-term growth agenda, empowering the tea workers and improving health, nutrition, education and livelihood opportunities.

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