• There is a significant gap between current and potential production yields, allowing scope for significant yield improvement. Farmers graduating from FFS are able to spread their obtained knowledge to their neighbors and, by doing so, indirectly influence the yields of non-FFS farmers. This positive spillover effect has a de-facto increase upon the impact of the capacity building efforts. While the opportunities are evident, the project partners are also aware of the challenges that this ambitious intervention strategy faces. These can be summarized as follows: • The project period for up-scaling and embedding sustainability in KTDA smallholder tea production is limited to 3 years (up to December 2015), which may not be sufficient to establish the desired number of FFS. • The number of graduate farmers might not be sufficient to realize the synergy effect of the merged FFS and RA structure. • Next to practical challenges to up-scale the training and extension services, it is challenging to fully develop the business model for sustainability in tea in terms of value creation and value capturing, e.g. developing the market uptake for certified tea while the supply of certified tea boosted so fast within the three year period. • It may be difficult to identify and capture added value created by certification. Some benefits of RA certification (e.g. biodiversity and environment), which cannot currently be captured or monetized for adding to the revenue model.
Although this study has largely been based on primary data collection and modeling, a number of relevant existing studies have also been used as references. Several studies analyzed the benefits of RA certification and FFS based on smallholder surveys and found that both activities bring the farmers benefits which range from health improvements to yield improvements and improved community relationships (e.g. between factories and farmers) 5. In order to obtain better metrics on the pros and cons of up-scaling investment, the current cost-benefit study has primarily been based on quantitative production, field trial and cost data obtained from KTDA factories and KTDA’s head office. The report is divided in five sections. Section 2 describes the research methodology, the scope of the study and assumptions made. Section 3 presents the business impact of the proposed investments for up-scaling Farmer Field Schools and RA certification. Section 4 presents two types of sensitivity analyses; the exchange rate sensitivity of the model and a population analysis. Section 5 presents overall conclusions and recommendations for future development.
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For an overview of these studies see the list of references at the end of the report.