Ethiopia’s largest commercial tea estate raised prices for out-growers a quarter following a visit to its farms by officials and experts from the Ministry of Agriculture and the Coffee & Tea Authority.

Executives of Ethio Agri-CEFT, a subsidiary of the MIDROC Investment Group (MIG), have made the decision after mediation efforts from these authorities. Officials found the dispute brewing between the smallholder farmers and the company’s executives as a pressing issue as tea export revenues dropped. Tea shipped abroad generated 1.9 million dollars last year, a 36pc dip. Green, black, and orthodox tea are produced in Ethiopia.

Shafi Omer, deputy head of the Authority, was among the officials who toured Agri-CEFT’s Gumero and Wushwush farms and sites under out-growers two months ago.

These tea estates under Ethio Agri-CEFT are two of the three largest tea plantations in the country, acquired from the state two decades ago through privatisation. Ethio Agri-CEFT grows the cash crop on 2,800 hectares, harvesting close to 3,000tns annually. Its plant can process 200qtl of tea a day. The company exports close to a third of its product. Its management has not been happy with the quality of tea supplied by smallholder farmers.

The out-growers too voice concerns about selling prices, which they say do not reflect rising production costs observed in recent years. A little more than 500 out-growers have been supplying Ethio Agri–CEFT since 2005, selling export-standard tea at six Birr a kilogram. They grow tea on 527hct, accounting for over 10pc of Ethio-Agri-CEFT’s production.

Smallholder farmers have been lodging complaints to the authorities through cooperatives, disclosed Aserat Mekuria, head of the Authority’s branch in the Southwestern Regional State.

Out-growers are organised under eight cooperatives, each allocating an average of 1.4hct of land to tea farming. A hectare can yield up to 2.5tn of export-standard tea annually, while the volume grows to six tonnes in standard green tea leaves.

Ethio Agri-CEFT avails credit to help farmers cover the costs of seedlings, fertiliser, and pesticides. However, the company limits the loans to 20pc of the forecasted selling price. Out-growers are expected to pay back the loan within six months.

Zewdu Hailu, 52, grows tea on a one-hectare plot in the vicinity of the Wushwush estate, near Bonga of the Keffa Zone. A father of five, Zewdu used to supply 500qtl of tea to Ethio Agro-CEFT annually. However, he has seen productivity drop by half in recent years due to the growing cost of production.

“Growing tea is labour intensive,” he told Fortune.

Zewdu employs up to 10 daily labourers to pluck tea leaves manually. He pays 2.5 Br for a kilo of leaves.

Plucking accounts for nearly a third of production expenses, according to Adane Tuffa (PhD), an agricultural economist. He advised that modern technology can lower reliance on labour and slash production costs.