London-based conglomerate Global Teas and Commodities, owner of Kericho Gold and Brook Bond teas, has received a $4m loan from the World Bank’s International Finance Corporation to expand to Malawi.
Global Teas and Commodities will use the financing to deploy renewable energy solutions to boost coffee, tea and macadamia production, and to support an outreach program for 3,300 local smallholding farmers.
The company already has substantial operations in Malawi:
- Kawalazi Estates Company Ltd in northern Malawi, which produces tea and macadamia nuts and comprises three estates.
- Makandi Tea and Coffee Estates Ltd based in the Thyolo region of Malawi, which produces tea, coffee and macadamia nuts and comprises two estates.
- Sable Farming Company Ltd in the south and east of Malawi. This includes comprising the Npanga division in the south and the Ngapani division in the east. It produces coffee and macadamia nuts and also has milk production and dairy processing facilities.
Global Teas and Commodities is also looking to expand capacity at its packaging and processing factory in Kenya to enable it to process an additional 5,000 tonnes of tea annually. In 2017, the company replaced Unilever as the largest purchaser of tea at the Mombasa auction. It currently handles 55m kg of tea annually and has sales of $130m annually.
In May 2018, the price for tea fell for the 3rd successive month, down to $2.47/kg, compared to $2.82/kg in February. Tea prices are highly volatile: in December 2012, prices fell from a high of $3.08 down to $2.00 in October 2013. After rising and falling in early 2014 they recovered sharply to reach a 10 year high of $3.09/kg in July 2015 before falling to $2.04 in April 2016.
Global Teas and Commodities’ expansion into other sectors – which include coffee, nuts, dairy and confectionery provides a hedge against volatility in the price of tea, which is still the core of the business. However, the commodity price for arabica coffee – only a minor crop in Malawi – has been falling since its high of $4.97/kg in October 2014 to just $2.99/kg in May 2018.
Ironically, macadamia trees used to be grown by farmers to provide shade for more valuable coffee bushes. However, macadamia nut prices have been consistently rising and 2017/8 have seen record prices in Southern African markets and Kenya. In Kenya, for example, farm gate prices for unshelled nuts rose to $2.38/kg in April 2018, up from $0.93 in December 2017.
