Taylors’ sourcing vision is to build resilient communities across our value chain that ensure our long-term security of supply of quality tea. Improving livelihoods, promoting equality, and facing into the challenges posed by climate change are integral to our approach. Our business strategy includes a commitment to work towards living wages being paid to all workers and living incomes earned by all farmers we source from. Bridging the gap to living wages and incomes requires sector-wide commitment and collaboration – we recognize that these are systemic challenges which are unlikely to be resolved unilaterally. So, the prospect of being part of an industry collaboration such as Malawi 2020 remains highly appealing since Malawi tea is such an integral component of our tea blends.
Sourcing the desired quality of tea from Malawi has been a consistent challenge for Taylors. This has limited our ability to operate in the Limbe auction and necessitated our quality benchmarking work via a direct trade model with a focussed supply base. Taylors staff/personnel have travelled to Malawi on a regular basis to foster our relationships and establish quality calibration, hosting reciprocal visits in the UK to attain shared perspective.
Sustainable procurement practices and developing strong relationships are essential to our approach. In Malawi, we typically have three year forward supply contracts in place that include objectives towards achieving a living wage. We have a floor price which increases year on year to reflect increases in the cost of production (which applies on both forward contracts and spot auction purchases); we have pricing mechanisms that reward quality improvements and sustainability performance; and we work with suppliers to produce bespoke quality grades, based on a common language around quality that is supported by regular feedback directly to tea factories.
In order to fulfil the combined objectives of Taylors, our suppliers and the Malawi 2020 programme, we recognized a need to agree pricing mechanisms based upon mutually agreed quality benchmarks rather than Malawi tea market averages, which do not always represent how we quantify value in the teas we are buying. We have therefore engaged positively with the Malawi 2020 Sustainable Procurement Mechanism.
The Malawi 2020 programme has uncovered several challenges in achieving its primary objectives of closing the living wage gap. The promiscuous nature of commercial relationships, exhibited across much of the global tea industry, drives transactional behaviour and makes value addition difficult to achieve. These short-term tactics mean that producers are understandably concerned about increasing costs of production to pay for higher wages, thus making their tea less competitive to buyers against similar quality standards from other origins. This unintended consequence of our objectives shows the systemic nature of the living wage challenge: trying to fix one part of the value chain in isolation will continue to result in limited success. The solution is complex, but Taylors is ready to play our part, through a commitment to long-term relationships, a sustainable commercial model recognizing value addition and a genuine desire to see living wages paid in every part of our supply base.