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News

Iriaini to sell value added tea


Contents Iriaini rolls out renewable energy project

Iriaini to sell value added tea to world markets

News

ICT changing lives and company operations at Iriaini 30 Years successful story in tea production and processing 3 4

Company’s profile

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Green leaf production on the rise after tough 2009

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Farmers receive record earnings for 2009 produce

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Factory recognised for quality standards

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Iriaini rolls out renewable energy project

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Director’s profile

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Giving back to the community

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Iriaini to sell value added tea to world markets

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ICT changing lives and company operations at Iriaini

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the team

From the Chairman’s desk

Executive Editor Mathew Ng’enda

Printed by Media Connect

Editorial Director Paul Gathirimu Associate Editor Sammy Mwangi Photography Francis Kabingu

Iriaini to sell value added tea Iriaini Tea Factory Board Chairman Mr. Githinji Wanjohi (second right), Factory Unit Manager Mr. Mathew Ng’enda (second left), Biomoto CEO Mr. Michael Kinyua (left) during the launch of use of biomass at the company in efforts to reduce over-dependency on firewood

IRIA–INI TEA FACTORY Co. LTD PO BOX 308 OTHAYA t: 020-2022839/2164012 e: info@iriaini.ktdateas.com

FLO-CERT

MISSION To provide efficient and effective services to the small holder tea farmers in production, leaf collection and processing of high quality teas for the benefit of the stakeholders. VISION To be the leading producer of high quality tea products in the world.

Tel: 0722 216378/ 0725 358401


editorial

30 Years successful story in tea production and processing

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he long journey to Iriaini Tea News has just begun. It has been the wish of Iriaini Tea Factory board and management to provide a sharing platform through which other stakeholders would share and interact as well as learn from their experiences.

This inaugural edition marks the birth of a publication that will provide stakeholders with stage to interact with each other share and appreciate one another. We are proud to have been able to meet our dream through Iriaini Tea News. The key aim of this publication is to give all our stakeholders timely information, promote and market Iriaini within and outside the catchments, as it updates all its shareholders and other stakeholders on the company’s achievements.This is being undertaken with a view of achieving our vision of “Making Iriaini Tea Factory a global tea leader in the production of high quality tea that is available to all.” The importance of all our stakeholders and the need to work closely with them for success can not be emphasized better than having this publication, which aims at keeping them appraised always. This commitment is in each of the board members, management, farmers and staff of Iriaini catchments.This has well been demonstrated by the recent awards from coveted international certifications namely ISO 9001 and ISO 22000-2008 as well as Fair-trade and Ethical tea partnership. We continue to better our operations as we await Rainforest and UTZ certifications in the first half of this year. To this end Iriaini has taken the initiative to lead and has shown determination to having continuous quality improvement for the delight of the customers. As a company Iriaini tea factory recognizes the importance of team work. Teamwork, commitment, honesty and diversification have been viewed as the corner stone of Iriaini success and every member cherishes it as well as practices it. This has been d emonstrated by the many capacity building trainings and seminars conducted every year. It’s with this background in mind that we are proud to have inaugurated this publication that will go a long way in actualizing our dreams and front us more to our trading partners. With a smile, warm cup of tea in hand, sip from Iriaini Tea Factory and enjoy your reading.

Mathew Ng’enda Board secretary/ Unit Manager

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Message

From the Chairman’s desk

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he journey towards progressive production of high quality tea for both local and export market at Iriaini Tea Factory has been going on well for 30 years since the company was commissioned. The company was able to record an increase in crop production in the year ended 30lh June compared to the previous years. The continuous increase in green leaf therefore suggests the company has to put in place measures in planning possible expansion of our factory. Tea prices during the year also gained an upward trend with an increase in of Kshs 51.88 per kilo from Kshs 189.48 in year 2009 to Ksh241.36 in year 2010. Farmers received a record payment as bonus where a total of Kshs 410,000,000 was paid. Each kilo of green leaf was paid at Kshs 33.40 which is higher than Kshs 26.00 in 2009. The company paid an interim dividend of 2.5%to class B shareholders amounting to Kshs 2,320,041. The company has made progress in addressing challenges emanating from local and global demands to keep on toe with its corporate goals as enshrined in its vision and strategy. We have partnered with other factories in our region and KTDA Ltd in the ongoing Gura hydro project which is expected to supply power to the factories thus cutting on the power cost in the factory. The company has leased for 30 years 200 acres of land at Muringato in Nyeri where 188 acres have been planted with exotic trees for our firewood project. A further 80 acres have been leased at Karima hill in Othaya where mature eucalyptus trees are ready for harvesting. I wish to note the company has introduced

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the use of Biomass in a measure lo reduce its dependence of firewood. This initiative will indeed go a long way in our efforts of conserving the environment around our catchments. Our partnership with Fair Trade has seen the establishment of income generating projects by our farmers. Currently three acres have been planted with yellow passion and sunflower in the ongoing passion fruit farming project. The bee keeping project has seen 100 bee hives laid on trees as value addition project. We arc projecting to raise up to 1000 hives and put 10 acres under passion fruit farming. Our efforts to maintain high social ethical standards in line with the global demands have enabled us to acquire various certifications which include Iso 9001, Iso

22000 and Fair Trade. I am pleased to note our company was recently cleared for the Rainforest Alliance/ UTZ Solidaridad certificate. On behalf of the board of directors, I wish to appreciate the staff of the company and the shareholders who have continued to supply high quality green leaf and their contribution to the success of the company. With God’s guidance I believe we are going to achieve even greater goals for the better and good of our company. Long live Iriaini Tea Factory.

Hutchinson Githinji Wanjohi. Board Chairman.


Profile

Company’s profile maintained with the results being awarding of various certifications like Fair Trade and Rain Forest UTZ. In partnership with Fair Trade, the factory receives premium funds used in initiation of income generating projects to its farmers. Bee keeping, passion fruit farming among others projects are currently ongoing.

Above & Below: Workers at the factory

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ince its Commissioning in January 1981, Iriaini Tea Factory has over the years established and maintained production of high quality teas for both local and export markets. The Factory lying between 0.27 longitudes and 36.56 latitude on a site area of 39.25 acres in Othaya, Nyeri South District had started with small scale holder farmers with an average of 0.5 acres then totaling to 510 hectares. The increase in the number of shareholders from 2115 at inception to the current 5747 shareholders has raised the factory’s current hectorage to 1145 ha.

for use as firewood in its boilers.The factory consumes 15 x 18000 sq meters cubes of firewood annually. Indigenous and exotic trees nursery has also been established and farmers have over the years received tree seedlings to plant in their farms. The factory’s nursery produces 50,000 seedlings annually since the year 1999. Environmental conservation practices conforming with both national and international standards have been

Funding has also been availed to corporate Social Responsibility projects with targets sectors being infrastructure, Education, Health, Security and Environmental management.There has also been an initiative like helping the needy, providing subsidized fertilizer to farmers, tea plant breeding research among others. The factory has over the years maintained a steady rate in payment to farmers with payment per kilo hitting the rate of Ksh.33.40 in the 2009/10 financial year. A steady production of green leaf has also been maintained with a mark of over 12 M kilos in 2009/10. the factory has 37 established workers and 30 subordinate staff workers. Among the projected future projects include sale of value added tea to international markets direct from the factory.

The upward trend in shareholding has seen the green leaf holding capacity improve to 15 million kgs from 10 million kgs during inception. Its location in an area characterized by red volcanic soils favorable for tea, coffee growing as well as other crops like maize, beans ,vegetables and daily farming. The factory management which is constituted of the factory unit manager, production manager, green leaf logistic cordinator, factory accountant together with six elected Board members has initiated various projects including planting Blue Gum trees on land totaling to 284 ha

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report

Green leaf production on the rise after tough 2009

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avorable weather conditions have been attributed to the 30.9% increase in Iriaini Tea Factory’s green leaf intake for the period ended June 30, 2010. The company received 12,290 metric tonnes in the 2009/2010 from 8,493 metric tonnes over the same period last year. Out of this, the company produced 2,912 metric tonnes of made tea which was an increase from 2,250 metric tonnes produced in 2008/2009 period. Over a five year period however, from 2006-2010, the year2007 remains the best year yet for Iriaini Tea Factory, when the company received 14,287 metric tonnes. The 2008/2009 period recorded the lowest amount of green leaf received by the factory since 2006.This was occasioned by the dry weather conditions experienced across the country. From the green leaf delivered, the company made to the farmers a total payment of Ksh565 million which was a 42% growth over the previous period at Ksh326 million. The company’s Chairman Mr. Githinji Wanjohi says green leaf production is expected to maintain an upward trend. In the year ended June 30, 2010, payment to farmers constituted 77% of the company’s total revenue.

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report

Farmers receive record earnings for 2009 produce

! High demand of Kenyan tea for the period ending June 30, 2010 proved to be a boon to Iriaini tea farmers as they earned a total of 410 million in bonus.This was a massive 41.5% rise that stood at Ksh240 million and was attributed to the high demand of Kenyan tea after other tea producing countries experienced drought.

The bonus payment for the 2009/2010 financial year increased with farmers getting Ksh33.4 up from Ksh26 per kilo in the first and second payment. Distribution of total revenue paid to farmers and the payment per kilo for the last five years is as shown below:

These are the highest earnings by the farmers over a five year period that saw the year 2007 record the lowest at Ksh156 million which was due to low demand for the Kenyan tea.

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pictorial

Green leaf from farmers being unloaded at the company’s green leaf bay.

A tea farmer delivers green leaf at Ruruguti Leaf Collection Centre that was refurbished using Fair Trade premium funds.

A leaf collection clerk receives green leaf from farmers using the Electronic Weighing System (EWS)

Iriaini Tea Factory shareholder keenly goes through the company’s annual report at the AGM

The Company has in partnership with Fair Trade assisted its shareholders in starting up income generating projects that include green house farming and bee-keeping. rabbit keeping as well as kitchen gardens

Iriaini Tea Factory Chairman Mr. Githinji Wanjohi and Mr. Jimmy Kibaki go through the pruning process, as one of the factory employees demonstrates the same, during the company’s field day

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pictorial

Iriaini Tea Factory has kept to its commitment in producing high quality tea for the export market

Factory Unit Manager Mr. Mathew Ng’enda with some of the company’s tea brands

With Iriaini tea farmers implementing good crop husbandry the company’s green leaf production has been on a significant year-on-year growth

Company Chairman Mr. Githinji Wanjohi confers with KTDA Board member Mr. Peter Kanyago during the company’s Annual General Meeting

As the country grapples with the effects of climate change, Iriaini Tea Factory has taken up the challenge of mitigating the effects of climate change by planting trees around its catchments

Biomoto CEO Mr. Michael Kinyua (left) explains how the biomass is made to the Factory Unit Manager Mr. Mathew Ng’enda (second left), Board Chairman Mr. Githinji Wanjohi (second right) and Kenya Association of Manufacturers advisor on Renewable energy Mr. Charles Makaka (right)

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Award

Factory recognised for quality standards

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n line with its policy of producing high quality tea for local and export markets, Iriaini Tea Factory has put in place and sustained Superior Social Ethical Standards in conformity with International requirements on production, marketing and environmental conservation. The Company has hence been awarded various certificates and promotions having satisfactory met the necessary requirements. Among the certificates the factory has been awarded include the ISO 9001/2008 and ISO 22000/2005 which were acquired in the years 2007 and 2009 respectively. These certificates were awarded after the factory put in place quality parameters systems on food production and handling in line with the international accepted standards.

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In the year 2004, Iriaini was awarded a certificate on Ethical Tea Partnership for its concern and safe guarding of the social Ethical issues to all parties while undertaking its cause. The Factory’s efforts in maintaining high Social Ethical Standards and its proven input in environment protection for effective sustainability, the factory was awarded a Fair Trade Certificate in the year 2006. Under the umbrella of Fair Trade, the Company receives a premium of half (0.5) dollar for every kilo of tea sold. The funds received from this partnership have been instrumental in establishment of income generating projects by tea farmers. Ongoing projects include Bee keeping, Fish farming, Rabbit rearing, Green house farming, passion fruit farming among others. Funds have also been used in Corporate Social responsibility Projects like roads,

schools and Security related issues in the communities around. The company efforts to attain the Rainforest UTZ Certification have succeeded as it has recently been cleared for the same. The certificate incorporates Social Ethical and Environmental issues from the farm level through the factory. Among the requirements for this certification include educating workers and farmers on environmental practices such as proper use of pesticides and other chemicals,controlled cultivation along river beds, restrained use of child labour and proper disposal of all forms of wastes among others. Some International Companies buying Kenyan Tea have threatened to stop buying tea from factories which will not have acquired this certification by the year 2015.


pictorial

Iriaini rolls out renewable energy project the time has come for renewable energy use as it was the only alternative to coal energy.The adviser to the Kenya Association of Manufacturers on renewable energy adds conversion of waste into tangible and storable energy was a milestone towards source of energy going natural. He hailed IriainiTea Factory management and the Board of Director for their innovation in project establishment and implementation saying their effort has enabled the company become one of its kind in the region. The factory manager feels the project would not have been a success were it not One of the workers loading the biomass into the boiler

In efforts to cut its reliance on firewood as a source of energy and also keep in line with its mission to conserve the environment, Iriaini Tea Factory is exploring ways of utilizing renewable sources of energy. The company in partnership with energy, experts intends to supplement its use of firewood in its factory and catchments with clean alternative and sustainable energy by use of biomass. This will in turn ensure a clean environment for all. This effort by Iriaini Tea Factory is seen as a commitment by the company to the global campaign on environmental conservation as a way to mitigate the effects of climate change. The project already is in its pilot phase and the factory is set to make the company achieve great milestone in the conservation of trees mostly used by tea factories in their production process. Much of the biomass to be used are materials like maize cobs, coffee husks, sawdust, biomass waste and the leaves of mature trees thus conserving

the trees which would have otherwise been cut for firewood, both in the factory and by farmers. Iriaini Tea Factory Unit Manager Mr. Mathew Ng’enda says the factory had initially depended on forests for firewood until a ban was imposed against felling of trees in forests. He notes they had in turn resulted to buying firewood from people in the area but the move could not be sustained for long due to high costs. “We have been using between Ksh20 million and 25million per year on firewood and we hope to save at least 30% of this amount when this project is fully implemented,” says the manager. The project will also benefit tea farmers from Iriaini Tea Factory since the biomass products will also be availed to them.“On average 5kg firewood is used everyday in a house hold for cooking which translates to 110,000 trees felled every year.“Says Mr.Ng.enda Mr. Charles Makaka hailed the project saying

The biomass ready for use and Inset:

for the cooperation among the various stakeholders. The chairman Iriaini Tea Factory Mr. Githinji Wanjohi says once the project is fully implemented the factory will become firewood free in the next 16 months. “We are currently using 70% firewood and 30% biomass product and we intend to phase out the use of firewood soon.” The factory has also partnered with others in the area to start a power generation project to cut the cost of electricity.

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board

Director’s profile MR.MICHAEL NDIRITU NDIANG’UI He is the vice chairman of the Board of Directors and the chairman of the welfare Committee which handles issues touching on Company’s staff/workers and the tea farmers. He joined the board in the year 2002.

MR. HUTCHINSON GITHINJI WANJOHI He is the chairman of the Board of Directors. Chairs the Board meetings. He joined the Board in year 2005. MR.TARACISIO MAINA MWANGI He is the chairman Fair Trade Premium Committee that oversees the implementation of projects funded by premium funds. Currently, farmers are undertaking income generating projects on Bee keeping, Rabbit rearing, Fish farming, Green house farming and passion fruit farming. Premium funds are also used to assist in roads maintenance, assisting schools as well as security in the society. He joined the Board in the year 2006

MR.ANDREW MARTIN RUGARA He is the chairman of the tender committee that oversees fair awarding of tenders to companies undertaking various activities/projects on behalf of the company as well as supply of goods and services. He joined the board in the year 2009.

MR.ALOYSIOUS MAGENYI KARIMI. He is the chairman finance and marketing committee that assesses the financial implications and cost benefits of various projects undertaken by the company for approval. The committee lays strategies for effective marketing of company’s products. He joined the Board in January 2011.

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MR.MAINA D.K. KAHUTHIA He is the chairman of the projects committee that oversees the smooth running of all the projects undertaken by the company. He joined the Board in the year 2004.


CSR

Giving back to the community

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ther than being a producer of high quality tea, Iriaini Tea Factory has over the years been involved in community based projects that have positively contributed in the well being of the residents in its

catchment areas.

The partnership with Fair Trade where a premium of half a dollar is given per kilo of sold tea has enabled the establishment of various projects as a way of giving back to the society. Among the projects currently been undertaken include bee keeping at Muringato in Nyeri and Ruruguti in Othaya. The honey from these projects and others of individual farmer s is expected to be exported to world markets.Tea farmers have also been assisted in passion fruit farming, rabbit rearing, water harvesting, fish farming and green house farming technology. Funds from the premium account have also assisted in education sponsorship for college students, maintenance of infrastructure like roads, security projects, health facilities and environmental management. The needy have benefitted from the company’s social responsibility programmes where they have received food,

Tomato grown in one of the FairTrade funded green house project firewood and clothing. Among the notable institutions that have benefited include Kanyange childrens home and Munaini Primary School special education unit in Othaya. The refurbishing of Kiahagu Secondary School and trophies has also been sponsored by the company. Inception of these community based projects have made the Fair Trade banner become a house hold name as farmers have been able to add to their income and reduce their over reliance on tea income. This has boosted the economic well being not only to individual farmers but the community at large.

A leaf collection centre under construction with funding from FairTrade

Conservations of forests and trees have under this initiative been boosted since the introduction of the energy saving jikos to farmers’ homes. The company has enabled many farmers to acquire these jikos at a subsidized cost.

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value addition

Iriaini to sell value added tea to world markets

Mr. Mathew Ng’enda displays the packaging for the value added tea

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ea farmers affiliated to Iriaini Tea Factory in Nyeri County are set to receive a major financial boost when plans by the company to start selling value-added tea to the export market are fully implemented.

before we officially launch the project, we have started receiving enquiries from the international market. With such interests, and more expected to come along, the future looks bright” adds Mr. Ng’enda.

The factory will be the first in the region to start selling value-added tea, by packing the tea into tea bags as opposed to selling it as bulk.

Iriaini Tea Factory has established itself as a leader among the other factories in the region, in embracing new innovations, including working towards meeting the requirements by international tea buyers.”This factory is committed to keeping abreast with technological advancement in the tea sector, to actively compete with others in this region and in the country,” noted zone IV board member Mr. Peter Kanyago during the factory’s annual general meeting.

Working closely with an international company, Iriani’s value-added tea will be exported directly from the factory to selected consumer stores in the European countries. Currently, Iriaini Tea Factory sells most of its tea in bulk through the Mombasa tea auction. According to the company’s Factory Unit Manager, the partnership will be of great help not only to the farmers but also to the community at large since new jobs will be created when it starts sourcing for labor in the packaging unit. Though the project is expected to kick-off anytime soon, the official launch is slated for February 2012. Thanks to the support accorded to the company by Traidcraft and Africa now towards value addition, “We are excited that even

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The value addition initiative comes after the factory successfully introduced bee keeping, fish farming and passion fruit farming in partnership with Fair Trade linked partners like Traidcraft and Africa now in an effort to boost the income of Iriaini farmers. The factory has also introduced biomass as sustainable energy project to reduce its reliance on firewood in a measure of conserving the environment in its catchment areas.


technology

ICT changing lives and company operations at Iriaini

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t has been a story of better returns and no cases of tea theft for farmers at Iriaini Tea Factroy since the company automated its tea collection process two years ago with the introduction of the Electronic Weighing System (EWS). Replacing the previously labour intensive manual tea buying system, characterized by long queues, backlog of data due to manual entry and cases of tea theft, Iriaini Tea Factory’s IT Manager Mr. Peter Kinyanjui says “the EWS improved the efficiency of the tea buying process much to the delight of the farmers.” He adds that being the second factory among the over 60 factories under the Kenya Tea Development Agency (KTDA) to roll-out the system, the company has been on the front line in implementing automated systems from KTDA aimed at improving factory operations.The company is currently using the ChaiPro software for its operations that include the handling of financials, growers’ accounts, factory operations and fleet management. “The introduction of the software in automating factory operations has led to cuts in production costs and improvement of farmers’ earnings,” adds Mr. Kinyanjui. “And with KTDA having in-house software developers, the software has constantly been upgraded to be effectively beneficial to the running of the tea factories.” As Mr. Kinyanjui explains, the EWS has particularly received praise from the farmers, who laud it for the elimination of tea theft by tea buying clerks and reduction in time spent at the green leaf collection centres. “Complaints of stolen kilograms of tea from farmers were the order of the day, but this is now in the past. We also have farmers selling their produce faster as compared to previous where we had some farmers having to spend the night at the green leaf collection centre due to delays in selling the produce,” adds Mr. Kinyanjui.

The Electronic Weighing System in use at one of the leaf collection centre’s The EWS consists of a weigh scale, a personal digital assistant (PDA) and portable printer, with rechargeable batteries that can operate for at least 24 hours on continuous weighing without power supply. Once a farmer delivers green leaf, the PDA automatically captures the weight into its memory and sends a print-out to the printer, which the farmer takes home. Using a Virtual Private Network (VPN) connection, the data is relayed real time to the company offices through the GSM network and recoded in the farmer’s account, all this without manual intervention. At the end of the month, combined collection data of all the farmers is sent to KTDA using the replicator software. The software encrypts the data sent to KTDA where it is decoded and re-routed to the particular factory accounts. Each factory has its own code. Under the factory account, the data is sent to the small scale farmer’s account to facilitate payment for the month. Funds are then transferred electronically to the farmer’s bank account.

Speaking on the efficiency of the system, IriainiTea Factory Unit Manager Mr. Mathew Ng’enda says “farmers are now receiving their pay on time with the payment being commensurate with the farmers pick, down to the decimal point in product weight.” “ICT should be used to improve people’s lives and this is what we intend to achieve as we look at innovating more around ICT,” adds Mr. Ng’enda. The company hopes that in future they can be able to pay the farmers through payment options like M-Pesa and introduce swipe cards at the tea buying centres to identify the farmers without going through the PDA records. The journey towards automation has not been easy though, as Mr. Kinyanjui explains. “Changing the mentality of the staff was not easy but over the time we have held training sessions that has brought them up-to-date with new technologies. We have also had to deal with infrastructure handicap in implementing some of these technologies but we continue upgrading the systems with time.”

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The side view of the Iriaini Tea Factory unit 16

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