IDH supporting tea estate Satemwa and AgDevCo
Satemwa, a small family-owned business in Malawi, is one of the most innovative tea producers, producing a number of specialist teas, quality coffee and a number of smaller specialist crops through neighbouring smallholders. Falling rainfall patterns over the last 20 years have resulted in lower yields and a possible financial viability problem for Satemwa, smallholders and other tea estates in the area.
Any irrigation improvements will benefit current and future estate and smallholder production of tea from out-growers adjacent to Satemwa estates in order to make the factory more efficient by allowing it to operate to full capacity and throughout the year, not just in the rainy season.
IDH, in partnership with AgDevCo and Satemwa, is supporting the establishment of the Thyolo Dam project on the Msuwadzi River. The project is set up in response to an approach by Satemwa to seek funding for the possible construction of a dam with associated irrigation for improved quality and yields of tea to be viable, competitive, and less dependent on rain water for irrigation.
The dam is expected to provide irrigation to a number of smallholder farmers in the Thyolo region in Malawi and the Satemwa tea estate for the cultivation of tea.
IDH works in Malawi to help revitalizing the Malawian tea industry for workers to earn living wages and smallholders to earn a living income. The Thyolo Dam project is developed under the pillar of a profitable estate sector in the Malawi Tea 2020 program.
To inform the process moving forward on the construction of the dam and its potential impact on estate sustainability and smallholder growth, IDH has funded an Environmental Impact Study. This study revealed that the proposed dam project will be viable and will have minimal effect to the environment and fish population on Msuwadzi river.
The proposed dam will have a capacity of 2,700 mega litres generating sufficient water to irrigate 900ha of tea. 60% of the water will be allocated to the smallholders providing irrigation to at least 1,000 households (540ha). 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 with Satemwa providing 40% in proportion to the allocation of the water.
In Satemwa’s bid to continue supporting smallholders, out-grower schemes will be established with smallholders growing tea and other cash and food-security crops under irrigation with Satemwa as the secure off-taker and providing farm and irrigation management services under contract. This is an expansion of the agreement that Satemwa already has where 3,000 smallholders are supported to grow tea and add value through the Yamba Tea Brand which exclusively sells smallholder processed tea. IDH has over the last 3 years supported the marketing effort of the Yamba brand increasing its output by 100%.
In the future, the irrigated tea out-grower scheme can be rolled out to a further 455ha of smallholder land upstream and downstream of the dam benefiting a further 900 farmers. The dam footprint would occupy an estimated 20ha of Satemwa land and 14ha of community land within the estate. Affected community members would need to be relocated and/or compensated accordingly. In this regard stakeholders have already been approached and discussions are underway.
Further to this, Satemwa employs a significant number of employees whose jobs will be sustained through the investment which protects against climate change and improves the ongoing viability of tea production in that area. The number of working days for existing employees is expected to increase due to the additional yields in the dry and colder seasons.
AgDevCo is an investor in the agricultural sector supported by the UK’s Department for International Development whose mission is to build successful agribusiness through long term investment and deliver positive social impact, raising agricultural productivity, increasing incomes and creating employment opportunities for rural communities.