Making Room for Smallholder Cooperatives in Tanzanian Tea Production: Can Fairtrade Do That?

Making Room for Smallholder Cooperatives in Tanzanian TeaProduction: Can Fairtrade Do That?

Allison Marie Loconto Emmanuel Frank Simbua

Received: 1 April 2011 / Accepted: 26 September 2011 / Published online: 10 January 2012

Springer Science+Business Media B.V. 2012

Abstract The objective of this article is to examine the

different ways that smallholders are brought into Fairtrade

certification schemes in the Tanzanian tea industry. We

examine the different ownership relations of processing

factories and the perceived benefits of these different

arrangements. We use descriptive qualitative analysis

based on qualitative interviews and focus groups conducted

between 2008 and 2010 to identify the significance

between factory ownership organization and Fairtrade

certification. We find that there is a movement toward

innovation in the organizational strategies, which includes

new ownership arrangements of processing factories and

outgrower contracts that have been associated with certi-

fied Fairtrade production. We also suggest that organiza-

tional innovation is significant for obtaining scheme

success yet perceived benefits of and increased information

about Fairtrade production is independent from ownership

shares in processing.

Keywords Fairtrade Ownership Governance Global value chains Tanzania Tea

Introduction

In Tanzania, tea was first grown commercially by planta-

tions in 1926. Smallholder tea production was first pro-

moted in the 1960s by the Tanzanian Tea Authority (TTA),

as it was illegal for smallholders to grow tea prior to this

date. However, low prices, late payments, and misman-

agement of factories left the smallholder industry extre-

mely weakened when the sector became privatized during

the 1990s (Tyler 2006). Currently, smallholders are pro-

ducing about half of the amount of tea per hectare that

estates produce (TBT 2009). The Director General of the

Tea Board of Tanzania has recently claimed that the low

levels of smallholder tea production can be attributed to

their lack of empowerment. Specifically he claims that,

If at all our tea farmers here in Tanzania own their

industry, I am sure they will be highly motivated in pro-

ducing it (Kimaro 2009, p. 3). One of the sustainability

indicators of the Fairtrade1 certification is the notion of

farmer empowerment, which includes decision-making

power and organizational strengthening (FLO 2009a, b).

Indeed, other scholars have noted that the power behind the

idea of fair trade is found in the model it provides for

(re)organizing market relations (Jaffee 2007). Simbua

(2006) shows that the key locus of decision-making power

in the Tanzanian tea value chain manifests at the grower

processor nexus, which is represented by the site of the tea

processing factory. As such, it is important to understand

the current and emerging ownership patterns of factories

involved in Fairtrade certification schemes, as these

A. M. Loconto (&)Institut National de la Recherche Agronomique, Science en

Societe (INRA-SenS), Institut Francilien Recherche Innovation

en Societe (IFRIS), Universite Paris-Est Marne La Vallee,

Bois de lEtang, 5, Bd Descartes, Champs sur Marne,

77454 Marne-la-Vallee Cedex 2, France

e-mail: [email protected]

E. F. Simbua

Tea Research Institute of Tanzania, P.O. Box 2177,

Dar es Salaam, Tanzania

e-mail: [email protected]

1 We differentiate between Fairtrade and fair trade throughout this

article. Fairtrade refers to the standard and organizations affiliated

with the Fairtrade Labelling Organizations International (FLO), while

fair trade refers to the concept and other groups not associated with

FLO.

123

J Bus Ethics (2012) 108:451465

DOI 10.1007/s10551-011-1101-9

encourage us to look at the ways in which growers and

processors are linked and empowered through these inno-

vative organizational relationships.

While fair trade schemes have been studied in depth

for other commodities, particularly coffee (e.g., Fridell

2007; Jaffee 2007; Raynolds et al. 2007; Wilson 2010),

very few studies have looked at fair trade tea (Besky

2008, 2010; Dolan 2008, 2010a, b). Moreover, the focus

of analysis in certification schemes has predominately

looked at the social impact of sustainability on labor

rights, social services, or marginal costs/benefits (e.g.,

Bacon et al. 2008; Fisher 2007; Johannessen and Wilhite

2010; Pierre 2006; Ruben et al. 2009; Valkila 2009),

rather than at the organizational arrangements as signifi-

cant contributions to sustainable practices (cf. Friedland

2001; Murray et al. 2003; Utting 2009). The objective of

this article is therefore to examine the different ways that

smallholders are brought into Fairtrade certification

schemes in the Tanzanian tea industry as a way to better

articulate the notion of empowerment that is claimed by

the Fairtrade system. In this article, we use a case study

approach (Patton 1990; Yin 1984) with data collected

between 2008 and 2010 to reflect on four Fairtrade cer-

tification schemes in Tanzania. We explore the chal-

lenges, opportunities, and perceived benefits provided

by each of the different ownership relations and the

possibilities for sustainability. Specifically we ask: (1) Are

there linkages between ownership models and Fairtrade

certification? (i.e., do perceived benefits from Fairtrade

certification increase with the percentage of ownership

shares?) and (2) Are there trends in governance that

facilitate sustainable relationships?

We argue that by combining insights from global value

chain governance and theories of firm ownership we can

better conceptualize the relationships between growers

and processors in Fairtrade certified supply networks.

A number of assumptions are made about the capacity of

Fairtrade to change trading relationships, specifically at

the growerprocessor nexus which is that specific site in

the value chain that is most promoted by Fairtrade as the

point where fair trading relations are most needed. The

four cases that we present show that the growerprocessor

relationships are barely affected in the practice of Fair-

trade certified tea trading. In this article, we first present

our arguments for conceptualizing different ownership

relations within the global value chain literature and a

brief justification of the methods used to compose the

case studies. These studies are presented within the con-

text of the Tanzanian tea industry. A discussion of the

implications of different ownership relations on small-

holder involvement in Fairtrade networks follows and

conclusions are drawn as to the sustainable nature of fair

trading relations.

Organizing Value in Agriculture

Organizational innovation is a broad concept that generally

means new ways that work can be organized and executed

so to promote the competitive advantage of an organization

(Hage 1999). Often, this concept is focused on specific

methods and strategies employed by management or indi-

viduals to change work processes within specific firms.

Stark (2006) refers to the organization of diversity in his

interpretation of organizational innovation. He defines this

as an active and sustained engagement in which there is

more than one way to organize, label, interpret, and eval-

uate the same or similar activity (p. 7). Building on this,

our understanding of organizational innovation is focused

less on internal firm behavior and more linked to the

relationships between actors in production networks (cf.

Henderson et al. 2002; Lam 2006). Put differently, we are

focused on innovative ways of organizing a diversity of

actors in the networks that are mobilized as value is

assigned to a product en-route from point of origin to point

of consumption.

One of the long-discussed ways of organizing diversity

in agricultural production has been through innovative

ownership arrangements of agribusinesses (e.g., linking

production, processing, and marketing). Some argue that

the current dominance of corporate-owned agriculture

threatens the survival of household-based, and family-

owned, production (Ainger 2003). Other forms of owner-

ship arrangements (family partnerships, individual or

family proprietorships, and cooperatives) are often cham-

pioned as viable alternatives to organizing agribusinesses

(cf. Buttel et al. 1990; Welsh 1998). Moreover, recent

developments in the Global South have shown that

innovative organizational arrangements and business

models (typically involving major private sector actors,

public research agencies, producers, and different com-

munities of users or sets of customers) are leading to

product differentiation or the derivation of high-value

products from traditional crops and plants (Ochieng 2007,

p. 149). In the consumer-led economies of the global

North, most competition is on the basis of customer

relationships, intellectual property, and innovative organi-

zational, and management arrangements (Harris 2005,

p. 4), Fairtrade is a case in point (cf. Davies 2009;

Ozcaglar-Toulouse et al. 2009).

The fair trade movement emerged, in part, with the

purpose of changing trading relationships between different

types of actors within the agri-food system (Jaffee 2007;

Raynolds et al. 2007). Beginning with crafts and coffee,

and expanding to other food and agricultural products (e.g.,

bananas, cotton), the fair trade movement looks to reshape

the actors involved in production by specifically seeking

out cooperatives as the main ownership structure of its

452 A. M. Loconto, E. F. Simbua

123

partners in trade (FLO 2009a). Tea, however, is domi-

nated by large multinational corporations, Limited

companies, family-owned businesses, and publicly traded

companies. Fairtrade has thus accommodated these own-

ership arrangements so to become more inclusive in the tea

industry (cf. Reinecke 2008).

Theorizing Ownership

Ownership is often operationalized as an equity arrange-

ment where the owner invests capital and in return receives

information and decision-making power about the firms

operations (Blasi et al. 1996). Put differently, ownership

of an asset consists of the right to control its use and to

enjoy its returns (Ben-Ner and Jones 1995, p. 532).

According to the property rights theory of the firm

(Grossman and Hart 1986; Hart and Moore 1990), own-

ership gives power which may or may not provide incen-

tives for increased productivity and thus profitability for

the firm (cf. Baker et al. 2002; De Meza and Lockwood

1998). From a psychological analysis of ownership, Pierce

and Rodgers (2004) suggest that systems which provide

the employee owner with opportunities to exercise some

form of influence/control over certain organizational affairs

will produce more consistent and positive performance

effects than an equity-based approach (p. 595). In sum,

research on ownership has mostly been focused on

understanding how arrangements affect a firms produc-

tivity and profits.

These theories place the question of ownership within

the rubric of the governance of a firms relations among its

stakeholders and allow us to theoretically conceptualize the

Fairtrade aim of inclusive governance and empowerment.

However, agri-food production is most often organized into

global value chains, which adds additional layers of control

and power inequities which are not so easily captured in an

analysis of productivity or profit gains of individual firms.

Instead, we must ask, how do firms with different internal

governance structures relate to the governance relations of

the value chains of which they are part?

Value Chains and Innovation in African Agriculture

Innovative business models and organizational arrange-

ments are accompanying the increased coordination and

flexibility between actors in global value chains (GVC)

(Bair 2009; Ochieng 2007). Gereffi et al. (2005) have

developed a continuum of GVC governance, represented

by five idea types separated by combinations of informa-

tion and power asymmetries: hierarchy, captive, relational,

modular, and market (Table 1). These types of governance

are differentiated according to transaction theory whereby

differences are found in: (1) inter-firm transaction

complexity; (2) ability to codify the transaction complex-

ity; and (3) suppliers capabilities to meet buyers require-

ments (Gereffi et al. 2005).

The core analysis around GVC governance has been

identifying lead firms that drive coordination of value

chain actors. This has led to the emergence of three main

trends: producer-driven (Gereffi and Korzeniewicz 1994;

Raikes et al. 2000), buyer-driven (Fold and Larsen 2008;

Gereffi and Korzeniewicz 1994; Konefal 2007); and more

recently twin-driven (Islam 2008), where a lead firm

(usually a buyer) governs the supply chain transactions,

while the regulatory aspects such as food safety, labor, and

environmental standards are governed by third-parties.

In other words, the standards, and the certification systems

that have been constructed to ensure their compliance

(Loconto and Busch 2010), are increasingly being used to

regulate the relationships between actors in GVCs. Thus, to

a certain extent, the second issue of governance identified

by Gereffi et al. (2005) is subsumed into the Fairtrade

system. As such, Fairtrade illustrates the twin-driven trend

in GVC governance.

This notion of twin-drivenness is also reflected in the

most recent discussions of value chain governancewhich

we argue provide insights for factory ownership arrange-

ments. First, Tallontire et al. (2011) are developing a the-

ory of horizontal governancewhich takes into account

the role of standards development organizations and local

actors in governing production. As early as 1994 political

economy theorists began to look at individual firms, spe-

cifically multi-national corporations, as actors that are

embedded (cf. Granovetter 1985; Polanyi 1957) in multi-

level networks of relations that are geographically and

institutionally situatedwhich have different implications

for the organization of production within the firm (Sally

1994). Neilson and Pritchard (2009) argue that national

institutional dynamics have been ignored in past GVC

studies and that by paying attention to these we can better

grasp the power dynamics and implications on production

in GVCs. Henderson et al. (2002) made a similar critique

of Gereffi and Korzeniewiczs (1994) original framework

on the grounds that national and often sub-national envi-

ronments provide opportunities for firms to organize

themselves differently and independently from their global

supply networks. This same phenomenon has been noted

by Bair and Peters (2006) regarding prospects for

upgrading in GVCs. Specifically, they argued that par-

ticipation in GCCs [Global Commodity Chains] does not

guarantee sustainable industrial upgrading and develop-

ment unless the export-oriented activities that link local

suppliers to global chains take root territorially and enable

endogenous growth (Bair and Peters 2006, p. 218). This

suggests that in regards to this particular case of fair trade

production, local laws, and domestic norms regarding

Making Room for Smallholder Cooperatives in Tanzanian Tea Production 453

123

ownership and firm organization may be more indicative of

the outcomes of certain types of production relations than

are global values-driven production standards like

Fairtrade. The present case study provides evidence to

support this theory and explores the ethical implications of

these institutional dynamics.

Methods

Following the tradition of Actor-Network Theory (ANT)

(Calabrese 1999; Latour 2005), we are interested in iden-

tifying key points of engagement where specific orderings

are negotiated and thus particular social relations are

assembled or performed. A tea-processing factory is con-

sidered to be the anchor of the tea value chain: a spe-

cialized stage where involvement of high capital costs

lowers the likelihood of competitors joining the chain

(Simbua 2006, p. 189). It is at this point in the chain that

key processing decisions are made, such as what process-

ing method to use, in addition to decisions about marketing

and the purchase of greenleaf from smallholder farmers

(Simbua 2006).

Most investors have purchased made tea (MT)2 pro-

cessing factories together with the purchase of large-scale

estates ([200 ha). In Tanzania, the domestic tea packingcompanies have also invested upstream through joint

investments in MT processing factories and/or estates that

provide the majority of the MT that is packed domestically

(e.g., Afritea and Coffee Blenders have a joint interest in

the Lushoto Tea Company which owns the New Mponde

Factory in the Usambaras). There are currently three dif-

ferent organizational relationships between tea growers and

factories in Tanzania. These relationships are (1) full

ownership of growing and processing by a single private

company, (2) full ownership of processing by a single

investor company and contracted growing by smallholders,

and (3) shared ownership between a single investor

company and smallholder cooperatives of processing,

and contracted smallholder production. These three orga-

nizational relationships are present in the Fairtrade certified

system and serve as the basis for the case studies presented

in this article.

The data for this article have been collected between

2008 and 2010 in Tanzania, Kenya, Germany and the UK,

through semi-structured interviews (24) and focus groups

(13) with FLO certifiers and liaison officers, smallholder

growers, estate workers, factory management and factory

owners for each of the identified grower/processor rela-

tionships. The study was approved by the Human Subject

Review Board of Michigan State University (IRB#08-480).

While company names are public information, individuals

anonymity has been protected. In those instances where

individual identity may be revealed, pseudonyms have

been used. All research participants provided informed

consent prior to their participation in this study. Content

analysis of the Fairtrade Labelling Organizations (FLO)

standards and a review of secondary data such as news-

papers and websites of the relevant organizations have also

Table 1 Global value chaingovernance typologies

Adapted from Gereffi et al.

(2005)

Power

asymmetry

Type Characteristics

Low Market Market linkages can persist over time with repeat transactions

Costs of switching to new partners are low for both parties

Semi-low Modular Products made to a customers specifications (i.e., turn-key services)

Suppliers take full responsibility for:

Competencies surrounding process technology

Use generic machinery that limits transaction-specific investments

Make capital outlays for components and materials on behalf

of customers

Medium Relational Complex interactions between buyers and sellers

Mutual dependence and high levels of asset specificity

Managed through reputation, or family and ethnic ties

Spatial proximity or trust and reputation in spatially dispersed networks

Semi-high Captive Small suppliers are transactionally dependent on much larger buyers

Suppliers face significant switching costs (i.e., captive)

High degree of monitoring and control by lead firms

High Hierarchy Vertical integration

Managerial control: managerssubordinates or headquarterssubsidiaries

2 Made tea is the technical term for the processed tea that is the final

product of the tea processing factory. It refers to tea that has been

made drinkable (i.e., steamed and dried for green tea, and oxidized

and dried for black tea).


123

contributed to the data used in this article. We use

descriptive analysis to identify trends in factory ownership

and scheme outcomes. The following sections explain the

organization of the conventional tea value chain in Tan-

zania and then present examples of the three organizational

arrangements that exist in the Tanzanian tea sector.

Organizing Tanzanian Tea

There are certain structural differences related to the way

by which tea is produced that differentiate it from other

Fairtrade commodities and value chains. Tea (black, green,

and white) comes from an evergreen bush (Camellia sin-

ensis) which thrives at fairly high altitude (14002500 m)

in the humid regions of the tropics and sub tropics. East

Africa is the main production site of tea in Africa and

Kenya, Malawi, Uganda, and Tanzania are the largest

producers and exporters of tea. There are two methods of

tea production that are found in Tanzania: cut-tear-curl

(CTC) or tea bag tea, and orthodox tea or whole leaf tea.

All the tea-processing factories in Tanzania produce CTC

tea; however, two of the Fairtrade and Organic certified

factories are also producing orthodox tea.

Chai ni kazi ngumu (tea is hard work) was an often

repeated description of tea by Tanzanian farmers. It is labor

intensive with its year-round harvest and maintenance.

The plucking schedules are every 720 days (depending on

the season) and freshly plucked green leaf tea must reach

the processing factory in less than 12 h so not to lower the

quality of the tea. This means that the areas around fac-

tories where both estate and smallholder tea can be grown

is rather restricted (Simbua 2006). This ties factories and

farmers together in close geographic proximity and allows

the factory a monopoly on green leaf purchase. As a result,

contract farming schemes, which link smallholders to

processing factories, have long been used. In this system,

small-scale farmers have access to inputs, agricultural

technology, and markets through contracts which require

them to produce according to international market

requirements (FAO 2009). Smallholders receive monthly

payments for the delivery of green leaf, which was an

average of US$ 0.11/kg for the Southern Highlands region

and US$0.09/kg for the Usambaras in 2009.3 The minimum

green leaf price is negotiated at the national level between

the apex smallholder association, the association of Tan-

zanian tea companies, and the Tea Board. However, each

smallholder association has further negotiated a green leaf

price with their local processing factory which has resulted

in the different averages in the two main tea-producing

regions. These national and local organizations (Fig. 1) are

in constant communication and collaboration, particularly

around the negotiation of agricultural workers wages,

smallholder green leaf prices, extension services, and

market information.

Market prices for made tea are fixed at the weekly

Mombasa Auction (Kenya), although the majority of

Tanzanian tea is sold outside of the auction through private

contracts (Baffes 2003; TBT 2009). While tea destined for

the domestic market is not sent to Mombasa, the domestic

prices are also based upon the Mombasa valuation of tea.

Tea quality plays a vital role in determining the final value

at auction. Although market fluctuations may affect the

general price levels, it is quality which distinguishes

the value of tea across different factories irrespective of

demand and supply patterns in the market. Thus, quality

and prices are negotiated by the factory manager with

either an auction broker, a wholesale tea broker or directly

with a blender. Fairtrade certified sales currently take place

outside of the auction system for Tanzanian tea.

Fairtrade Organized Tea

We can conceptualize the use of the standards developed

by the Fairtrade Labelling Organizations International eV

(FLO) as a means to innovate the organization of the

commodity chains that have added fair trade value. FLO

standards act as the rules about those who are governed

within their value chains and are based on the ideas of

transparency, partnership and participation, representative

democracy, and equal exchange (FLO 2009a). Within the

Fairtrade system traders and producers must be certified in

the tea value chain. This translates into certification for

producers (farms and factories), buyers (international

traders), and blenders/packers. According to the FLO

(2010d), certified traders (the buyers and blenders) must:

1. pay a price to producers that covers the costs of

sustainable production and living;

2. pay a premium that producers can invest in

development;

3. partially pay in advance, when producers ask for it;

and

4. sign contracts that allow for long-term planning and

sustainable production practices.

These standards are created within the FLO organization

by a specialized division for standards setting and in public

consultation with FLO members. The FLO governing

board includes six elected representatives from the national

Fairtrade initiatives (e.g., Max Havelaar and Transfair),

four elected by producer organizations, and two elected by

3 The third main tea producing and processing region in Tanzania is

found in Bukoba district in the Kagera region, but was not included in

this study because it is not part of the Fairtrade certified production.


123

certified traders. Producers are further represented through

regional producer assemblies and the biennial fair trade

forum (Auld 2009). It has been argued that the standard

setting process of FLO is indeed a participatory process,

however, the concepts of fairness and transparency are

contested (Reinecke 2010).

Fairtrade certification in Tanzania began in 1994 with

Mufindi Tea Company (MTC) being the first to become

certifiedbecause [they] believed in the ethics that fair

trade represented (Interview October 2009). Both estates

and smallholders can become certified for tea,4 which was

a problematic policy introduced by FLO. Equal Exchange,

an NGO that trades exclusively with small-scale coffee,

tea, cocoa, and banana farmers, explained it like this:

A few years ago, in a controversial move, one of the

two Fair Trade certifiers changed a key requirement

when they constructed the Fair Trade model for tea.

They decided that due to the scarcity of small farmers

in the major tea producing countries such as India and

Sri Lanka, the model would revolve around planta-

tions rather than small farms. In addition, a vague

higher than normal price replaced the easily

verifiable minimum price requirement. The result

was a certification that has significantly different

standards than its coffee counterpart. By focusing the

Fair Trade model on plantations, small farmers

already weak in the tea economy, were further mar-

ginalized (Equal Exchange 2010).

This decision added a focus on estate-produced value

chains, which was not the norm with other Fairtrade

products. With tea plantations, the focus of the fair trade

movement was therefore predominantly concerned with

eliminating child labor and improving the working condi-

tions of hired labor (Auld 2009). To achieve these goals, a

sustainability margin was added to the Fairtrade tea

premium to encourage factories to participate in the sys-

tem. The structure of the Fairtrade tea premium varies

according to the product (CTC or Orthodox) and the type

of producer, Hired Labor company (HL) or Small Producer

Organization (SPO) (Table 2). The sustainability margin

is a payment of US$0.10/kg out of the US$0.50/kg Fair-

trade premium that goes to the estate management to

support improvements in working conditions as part of

ongoing certification and compliance with Fairtrade stan-

dards (FLO 2010b). This sustainability margin is not pro-

vided to those factories that are sourcing only from SPO

certified farmers as the SPOs are free to allocate their

premium for that purpose if they wish (FLO 2010c, p. 9).

Fig. 1 Tanzanian teastakeholders. Note: the linkingarrows indicate the direction ofrelationships where negotiation,

sharing of information,

resources, or control occurs

between stakeholders

4 The Fairtrade tea standard and statistics cover black, green, white,

and oolong tea, they also include herbal infusions (i.e., chamomile,

hibiscus, mint), spices, and rooibos tea.


123

This premium is on top of the Fairtrade floor prices that

were introduced in 2007 and as with other Fairtrade pre-

miums is designated for community development and is

not considered additional income for the producers. The

2010 revision of the Tea standard raised the minimum price

for non-organic CTC tea from US$1.40/kg MT for the

auction and US$1.50/kg MT for direct sales to US$1.50/kg

MT and US$1.60/kg MT, respectively (FLO 2010a, b).

This means that the average auction price for Tanzanian tea

(US$1.42/kg MT) was slightly higher than the Fairtrade

minimum price for the auction in 2009. However, there are

a few caveats. In 2009, most Fairtrade certified tea was sold

through direct sales, which means that estates received a

minimum of US$1.50/kg MT. Since the Fairtrade standard

does not mandate a change in the greenleaf price of tea, and

the practice in Tanzania is to negotiate the greenleaf price

at both national and district levels, the average greenleaf

price of US$0.10/kg is valid even for the Fairtrade certified

producers. If we conduct the same calculation for mea-

suring the percentage of the price that smallholder farmers

receive from the price of MT, we find that they are

receiving a lower percentage (26%) of the MT price than

with the conventional system. Moreover, in Tanzania, the

Fairtrade tea sales are only for the primary gradeswhose

mean auction price for 2009 was US$1.66/kg MT (Africa

Tea Brokers Ltd. 2010). Because direct contract prices are

negotiated based on the Auction prices, in practice this

means that most of the Fairtrade tea bought in 2009 was

often sold by the estate factory at prices higher than the

Fairtrade minimumtranslating into even lower percent-

ages of the MT price for smallholders and higher per-

centages for the estate factories. This again points to the

important role that factories play in the Tanzanian portion

of the tea value chain, as it is here that any price premiums

will be absorbed.

While there is mention of cooperatives being a

requirement for the participation of smallholder farmers,

and the main means through which smallholders may be

empowered, there is no indicator in the FLO standards that

dictates the relationship between the growers and the pro-

cessing factories, nor is the price for green leaf mentioned

in the Fairtrade floor price. The greatest deviation from the

traditional organizing of the Tanzania tea value chains in

the Fairtrade system is the introduction of the Fairtrade

premiums and the corresponding groups that are created to

manage these funds. The HL arrangement involves workers

and management working together to achieve improve-

ments in the workers lives using the Fairtrade Premium

(FLO 2007, p. 4), while for the SPO the way the organi-

zation works can be a way to encourage this development

(FLO 2006, p. 4). The dynamics of these relationships are

explicated in the following case study examples.

East Usambara Tea Company Ltd. (EUTCO)

EUTCO, operating in Muheza District of Tanga Province,

is a Tanzanian registered company, owned by the MAC

Group Plc.a Tanzanian, family-owned, shareholding,

umbrella company for a number of different companies in

the Tanzanian economy (e.g., banking, mining, real estate,

shipping). EUTCO operates two factories and estates

(Bulwa, Kwamkoro), which comprise 14,164 ha of which

2,000 ha are planted to rain fed tea and 450 ha to euca-

lyptus trees (MAC Group 2011). EUTCO was Fairtrade

certified from 2007 to 2009. Prior to the current ownership,

EUTCO was owned by two UK-based companies, namely

Global Tea and Commodities Ltd. (20012005) and CDC

Group Plc (19872001). Prior to this, EUTCO was

nationalized and run under the TTA system. The majority

of production for the two factories comes from the com-

panies own fields as there are not many smallholders in

Muheza district who grow tea246 smallholders farming

119 ha that source to three factories (Priest 2010). Among

the reasons for this is competition for highly fertile land

Table 2 Fairtrade premiums (FTP), minimum prices (FTMP) and sustainability margins (SM) for Tanzanian tea (October 2010)

Type CTC teas (all grades)

Orthodox teas (dusts and fannings)aOther orthodox tea grades

Conventional Organic Conventional Organic

SPO FTMPb 1.50/1.60$/kg FTMP 1.70/1.80$/kg FTP of 1.10$/kg FTP of 1.10$/kg

FTP of 0.50$/kg FTP of 0.50$/kg

HL FTMP 1.50/1.60$/kg FTMP 1.70/1.80$/kg FTP of 1.10$/kg FTP of 1.10$/kg

FTP of 0.40$/kg FTP of 0.50$/kg

SM 0.10$/kg

Adapted from FLO (2010a, c)a Dusts and fannings refer to grades of tea which are distinguished by particle size of the leafb FTMP are distinguished by auction price/free on board (FOB) price (i.e., direct sale)


123

with high value crops such as spices, fruit trees, and maize.

Moreover, there is a history of industry neglect towards the

smallholders in this area, which has eroded the tea culti-

vation culture (Faber 1995). The Tea Research Institute of

Tanzania (TRIT) has been engaged in research and

extension in this area since 1999. TRIT staff noted that

the greatest difficulty in providing extension services is

changing the attitude of smallholders about the benefits of

growing tea (Interview January 2010). However, the

company has been encouraging outgrowers by providing

plants from their own tea nurseries at subsidized rates and

they expect an increase in smallholder production in the

future (EUTCO 2010).

EUTCO was certified under the HL arrangement and no

smallholder farmers were involved in the Fairtrade system.

The decision to engage with Fairtrade was a management

decision, based on negotiation with a set of buyers, yet

during the 2-year period of certification, EUTCO was

unable to sell a single kilo of tea (Interview January

2010). According to management, the buyers who

prompted the certification pulled out based on the low

quality tea produced by EUTCO. When workers were

interviewed, it was difficult to find workers who knew what

Fairtrade was and were aware that operations had been

certified. However, middle management remembered the

visit of the last certifier whose audit resulted in the

de-certification of the factories and estates. The lack of a

substantial number of smallholders organized into a strong

tea growers association, coupled with a history of poor

management practices, has led to no rights of control or

return for smallholders supplying to the EUTCO factories.

EUTCO has been selling its tea mostly to the domestic

blenders and has only begun to send its tea to the Mombasa

Auction in 2009, after many years of absence due to low

quality. EUTCO has a shorter value chain than most other

Tanzanian tea producers because of its reliance on the local

market. However, the relations within this value chain are

market governed, as the improved quality presents more

options to switch to new trading partners.

Bombay Burmah Trading Corporation Ltd.Herkulu

Estates (BBTC)

BBTC, operating in Lushoto and Muheza Districts of

Tanga Province, is an Indian registered share-holding

company that operates two factories and estates in Tanza-

niaHerkulu and Marvera. BBTC is Indias second oldest

publicly quoted company (Wadia Group 2010). In 1954,

the Indian company spread BBTCs tea interest to East

Africa. In January 1956, Herkulu Estate in the West

Usambara Mountains was purchased, the factory has been

in operation since 1961, and teas have been sold at auction

(London and Mombasa) for the duration. Since 1989/90,

the Herkulu Estate (230 ha) has been organically culti-

vated; beginning in 1994 it was certified organic by the

Institute of Marketecology, Switzerland (IMO) (Bombay

Burmah 2010). Since 1997 Herkulu has been certified

according to the FLO HL standard, but presents an inter-

esting arrangement whereby the smallholder farmers were

involved in the Joint Body (JB).

Herkulu has an outgrower contract with about 2,000

smallholder farmers who are part of the local Tea Pro-

ducers and Marketing Co-operative. This cooperative was

created in 1999 when this group of farmers split from

UTEGA (the umbrella smallholder association for the

Usambaras region) to begin sourcing to Herkulu. This

break represents an interesting case in the local politics of

tea in Tanzania as UTEGA owns 50% shares in the only

wholly smallholder sourced factory in Lushoto and all

UTEGA members should be receiving share payments. The

reasons given for the shift to sourcing to Herkulu were that

(1) Herkulu paid on time and (2) the farmers were

receiving additional benefits from the Fairtrade funds

(Focus Group January 2010). In fact, although these

smallholders were not FLO certified, Herkulu management

allowed them to be represented on the JB since they lived

in the same villages as the majority of workers. Over the

years, the JB has invested the funds to build dispensaries,

classrooms, housing for para-medical staff and teachers,

and to build bridges to better connect the surrounding

villages. The premiums have also been used utilized: to

procure roofing sheets for local school buildings; distrib-

uting roofing sheets to workers; providing cement and

sewing machines to workers (as a majority of workers

choose not to live in the company provided accommoda-

tion); and setting up a Fairtrade shop where supplies are

purchased at wholesale prices from the towns and sold to

the workers and smallholders on a no-profit-no-loss

basis (the workers only are allowed to purchase supplies

from the shop on credit). Additionally, a maize mill was

installed as a joint project between the JB and BBTC,

which is available to residents of the surrounding villages.

The smallholder involvement in the JB was stopped as a

result of the FLO audit in 2009, FLO adjudicated that the

smallholders should not be involved as they were not part

of the certified system. Management did not argue as they

had noticed that the smallholders had been dominating the

decisions made by the JB (Interview January 2010). As a

result, we locate the ownership arrangement of Herkulu

within the quadrant of participation rights and small return

rights. This reflects the perceived benefits and control that

smallholders expressed.

In terms of the BBTC value chain, all tea sales are

managed by the India-based management company. The

Herkulu factory receives the orders and ships the product


123

either to the Auction or through direct sales. One of

Herkulus main buyers, Cha Do, is an agent of the com-

pany that markets Herkulus tea. In addition to purchasing

under both the organic and Fairtrade labels, Cha Do pro-

vides technical assistance on quality standards. This com-

pany is also highly engaged in the FLO system and sits on

the Product Advisory Council (Interview March 2010). We

thus characterize the Herkulu value chain as hierarchical

given the formal integration of assets and trading systems

within a single ownership structure.

Mufindi Tea and Coffee Company (MTC)

MTC, operating in Mufindi and Njombe Districts of Iringa

Province, is a subsidiary of Rift Valley Holdings, which is

a share-holding company created in 2005 by a merger of

the African interests of Saxonian Estate Ltd. and Hoegh

Capital Partners Ltd. All three of the factories and estates

owned by MTC are Fairtrade certified (Itona, Luponde, and

Kibena). Together with Unilever, MTC controls more than

half of the production of tea in Tanzania. MTC was first

established in 1954 with the Itona factory in Mufindi dis-

trict (operational 1960) and added Luponde estates in 1987.

Luponde received organic certification in 1988 and, toge-

ther with Itona, was the first to receive fair trade certifi-

cation in 1994 through Tradecraft. During the socialist

period, MTC was nationalized due to political concerns

about its Zimbabwean ownership; it was handed back to

the company in 1995 (Interview November 2009). Kibena

estate was planted, by CDC Group Plc., on land originally

farmed with wattle trees in 1997. In 2002, it merged with

Tanzania Tea Packers Ltd. (TATEPA), a successful Tan-

zanian tea processing, packaging and distribution business

also controlled by CDC. Together they created a strong,

integrated tea business which was the first company to be

listed on the Dar-es-Salaam Stock Exchange (Tyler 2006).

In 2007, Kibena was bought by MTC.

Itona and Luponde joined Fairtrade under the HL

arrangement and have not engaged smallholders in the JBs.

However, both factories do have strong ties with the local

smallholder associations and Itona has a separate process-

ing line dedicated to processing smallholder green leaf tea.

The competition with Unilever in Mufindi district has

allowed the local smallholder associations (uniquely

organized into block farms from the socialist period) to

negotiate higher than average prices for their green leaf tea

and they have benefited from both Fairtrade and company

investments in community infrastructure as well as an

active presence by TRIT who have been working in the

district since 1999. While under the ownership of

TATEPA, Kibena developed a model HIV/AIDS outreach

program and also gained Fairtrade certification for their

estates as soon as they started processing tea. The Kibena

workers receive the Fairtrade premium that has brought

benefits to the local community. However, they com-

mented that there was too much investment being made in

the community and not enough being made for the living

conditions of the workers (Focus Group February 2010).

According to Fairtrade rules, the premium may not be

used for expenditure for which the company is legally

responsible (FLO 2007, p. 4). As housing is a legal

requirement in Tanzania, Fairtrade funds cannot be used

for this purpose.

Under TATEPA, Kibena also experimented with

bringing smallholder farmers into the Fairtrade system. The

first was MADISA smallholder tea growers association in

the neighboring district. The district where MADISA is

located is an area of current and historic political turmoil.

The tea factory that is located less than 7 km from

MADISA villages is 50% owned by the competing

smallholder association (CSHA) and a family-owned

Tanzanian company. During data collection, that factory

had been overtaken by CSHA and closed because of a

dispute of illegal sale of the factory by the government

during the dismantling of TTA. However, MADISA had

been sourcing to Kibena for a number of years and the

village leader was the owner of the transport company that

organized the transport from this area to the factory, which

was more than 70 km away). Kibena management assisted

the smallholder association to become certified (by filling

out the forms for them and paying the first certification fee)

and agreed that a certain quantity of tea would be sold

through Fairtrade each year. MADISA was certified from

2006 to 2008 and during that period of time they received

TSH 10 million from Fairtrade premiums. However,

MADISA was decertified in 2008 and the justification

varies among research participants ranging from com-

plaints about lack of support by the factory management,

through local politics between competing smallholder

associations, to the inflexibility of the FLO system itself in

its documentation requirements and lack of autonomy in

choosing community projects to invest in (Interview

October 2009; Interview January 2010, and Focus group

February 2010). As this example illustrates, MTC allowed

small rights of return for smallholders as they were tran-

sient, and shared control of the Fairtrade process, despite

the fact that it was this control that allowed the small-

holders to exit the system.

MTC is an active participant in the African Fairtrade

Network. It was one of the first partners of what was at the

time called Twin Trading tea (now CafeDirect); how-

ever, their sales to CafeDirect have dwindled over the years

and the percentage of tea sold under the Fairtrade label is

about 5 of tea sold by all the three factories combined.

MTC relies mainly on direct sales for its certified tea and

invests in marketing. For example, Luponde tea is sold


123

under the Luponde brand at a shop of the same name in

London. Direct sales links have also been created through

personal ties and through a wholesale trader in the UK that

holds shares in TATEPA. The MTC value chain embodies

the Fairtrade notion of relational governance based on

complex interactions between buyers and sellers, despite

the retreat of CafeDirect.

Wakulima Tea Company (WATCO) and the Rungwe

Smallholders Tea Growing Association (RSTGA)

WATCO, operating Katumba Factory in Rungwe District

of Mbeya Province, is a joint venture between TATEPA

(75%) and smallholders represented by RSTGA (25%).

TATEPA is a small private-holding company that was

established in 1995 by the joint involvement of a Tanza-

nian national and a UK investor (CDC Group plc). This

company has been heralded by the World Bank as an

example of well-directed venture capital and technical

assistance (World Bank 2000). It then expanded

upstream and bought WATCO, a smallholder tea pro-

ducer that had been formed in 2000 as part of the privati-

zation scheme of the TTA. The business plan for

TATEPAs investment in WATCO is based on the inten-

tion of selling 100% of its shares to RSTGA. RSTGA is the

smallholder tea growers association that represents the

16,000 tea farmers in Rungwe. It is organized into nine

sub-schemes and each sub-scheme is composed of 10 or

more villages. There are currently 118 villages growing

tea. Each sub-scheme is headed by a Chairman and a

Secretary. The Chairman of each sub-scheme automatically

becomes the member of the RSTGA Board. The Chairman

of the RSTGA is democratically elected by the Board and a

secretariat for the association accommodates an accounting

department and administration for the Rungwe Fair Trade

Fund (RFTF) and the Rungwe Smallholders Tea Devel-

opment TRUST Fund. Both WATCO and RSTGA are

certified for FairtradeWATCO as a trader and RSTGA as

a SPO.

RSTGA is fully responsible for managing Fairtrade

affairs and its administrative structure is able to accom-

modate the paperwork requirements of FLO. Technoserve

has provided volunteer consultants who have been working

with RSTGA to streamline its administrative processes and

become more business-oriented in preparation for its

eventual purchase of WATCO (Mwakasege 2009). Addi-

tionally, RSTG actively participates in the Africa Fairtrade

Network. As a result, we see RSTGA as having full control

and return rights to the farming aspect of the Fairtrade

process. RSTGA has reported receiving over US$ 1.2

million over 7 years from the Fairtrade premium, which

has contributed to building schools, dispensaries, bore

holes, and a Savings and Credit Cooperative Organization

(Interview October 2009). This same group has also

reported increased yields and productivity during this

period (Rowland 2008), however, this cannot solely be

contributed to Fairtrade (Interview October 2009). During

this period, WATCO hired TRIT to provide commercial

extension that provides farmers with technical support to

enable them to attain optimal production potential;

acceptable quality within the given plucking schedule;

facilitate logistics of green leaf collection; facilitate correct

and timely payments to farmers; and coordinate field

activities, and use of inputs. This is an innovative approach

linking production, transportation, processing, and mar-

keting. All these work together under different organiza-

tions (i.e., RSTGA controls production, WATCO controls

processing and marketing, and Jilanjo is contracted by

WATCO to provide transportation). We can thus charac-

terize the ownership of WATCO as an arrangement where

the smallholders have moderate return rights (25%) and

sharing of control rights.

The value chain for WATCO tea is also based on

relational governance steeped in trust and entrenched

trading relationships. Fairtrade contracts are negotiated

entirely outside of the auction system and account for

typically about 10% of production. CafeDirect is one of the

main buyers of WATCO tea and WATCO is a shareholder

in CafeDirect. Also, the previously mentioned TATEPA

wholesaler purchases directly from WATCO. We observe

significant involvement of stakeholders in contributing to

the operations and maintenance of Fairtrade values. For

example, CafeDirect is very active in supporting its pro-

ducers and has consistently involved WATCO/RSTGA in

its climate change and other development projects (cf.

Davies et al. 2010).

Discussion

The conceptual model put forward at the beginning of this

article suggested that ownership arrangements can be

analyzed based on rights of control and return for stake-

holders. If we consider the Fairtrade premium to consist of

a right of return and the decision making about Fairtrade

concerns as a right of control, we can see the following

typologies of smallholder ownership in Tanzania (Table 3).

These typologies show EUTCO as the arrangement

whereby smallholders are the most excluded from control

and returns in the ownership relationship, while the

smallholder cooperative RSTGA provides the greatest

returns for smallholder farmers. However, RSTGA does

not fully control the processing factory, which is owned by

WATCO. Thus, we see that WATCO allows fewer rights

of return and control than RSTGA. BBTC is an interesting

case as it has allowed small return rights and participation


123

in control over the Fairtrade premium despite the fact that

smallholders are not Fairtrade certified. In the two cases

where smallholders were indeed certified (MTC and

WATCO) the control rights held by smallholders were

similar but WATCO allows greater return rights than MTC

allowed. These two cases are also of interest because we

see two different types of ownership arrangements of the

processing factory itself granting the same level of control

rights, but return rights are also greater for the smallholder

owners of WATCO because they are also receiving returns

on the sustainability margin due to their ownership

shares in the factory itself.

These results suggest that there is no set pattern of

ownership that conditions involvement in Fairtrade.

Rather, specific relationships between factory management

and smallholders either facilitate or hinder the involvement

of producers in Fairtrade networks. We find a movement

toward innovation in the organizational strategies for

linking growers to tea processing factories in Tanzania.

This innovation includes new ownership arrangements of

processing factories and outgrower contracts that have

been associated with certified Fairtrade production; how-

ever, these contracts are not dependent on the Fairtrade

certification. In fact, only one out of the four case studies

tells the story of a smallholder association that has been

able to successfully maintain its certification. We therefore

suggest that organizational innovation, such as selling

ownership shares in the factory to smallholder associations,

is important for success in maintaining Fairtrade certifica-

tion as is illustrated with the case of Rungwe. We also note

that perceived benefits from Fairtrade does not necessarily

increase with ownership shares in the processing factory as

illustrated with the case of Herkulu. Finally, we have noted

that long-term relationships between value chain actors and

other stakeholders has worked to create more sustainable

relationships between growers and processors in the tea

sector.

These results suggest that there may be opportunities for

Tanzanian value chain actors to expand upon these orga-

nizational innovations as a means to upgrade their value in

the chain. As we have shown, the Fairtrade and the tradi-

tional value chain actors make their market calculations

based on the value of made tea rather than green leaf. Here

there are two propositions for financially empowering

Fairtrade certified smallholder farmers, (1) enable them to

control downstream stages of the value chain such as

processing and marketing and (2) encourage Fairtrade to

set a floor price for greenleaf rather than for made tea. The

first option provides more opportunities for innovation as

smallholders and tea companies in Tanzania are already

experimenting with these options by forging new com-

mercial relationships directly with companies in the Global

North which are both inside and outside of the Fairtrade

system and by capitalizing on long-entrenched relation-

ships by adding the Fairtrade label (Loconto, forthcoming).

However, as these case studies illustrate, this does not

necessarily change the power relations between small-

holders and processors at the local level. The second option

runs the risk that such an exercise may get diluted by the

one shoe fits all style noted of the current Fairtrade

system or the effort may become redundant due to local

contract negotiations that are usual business practices in the

tea industry. In Tanzania, the political climate is ripe for

assisting smallholders to upgrade their value in supply

networks; however, the mainstream investment climate for

new and innovative ventures does not yet appear forth-

coming. Therefore, the current practice of joining one or

more social and environmental certification schemes

appears to be a response by the Tanzanian tea industry to

deal with opportunities and constraints that they encounter

both in the local and national institutional environments

and in their global value chains.

Conclusions

In the literature, we are told that fair trade conventions

have emerged from personalized sets of relations repre-

sented by the Alternative Trade Organizations, World

Shops and national fair trade labeling initiatives (Aude-

brand and Pauchant 2009; Raynolds et al. 2007), and have

moved toward the codified form of standards that have

expanded the reach of the fair trade movement and begun

mainstreaming fair trade concepts. Some herald this as a

Table 3 Typology of ownership in Tanzanian fairtrade certified tea

Return rights held by smallholders Control rights held by smallholders

None Participation in control Sharing of control Dominant control

None EUTCO

Small BBTC MTC

Moderate WATCO

Majority RSTGA

Adapted from Ben-Ner and Jones (1995)


123

restructuring of agri-food value chains (Cavanagh and

Mander 2004). Others, however, are more cautious. For

example, Reed (2009) argues that the involvement of

corporations in both the trading and the production of

Fairtrade bring benefits to value chain actors while also

posing serious risks to the social and economic values of

the fair trade movement.

Dolan (2010b) argues that certain neoliberal rational-

ities are emboldened through Fairtrade, as a process of

mainstreaming installs new metrics of governance (stan-

dards, certification, participation) that are at once moral

and technocratic, voluntary and coercive, and inclusionary

and marginalizing (p. 33). Jaffee (2007) notes that FLOs

recent efforts towards capturing a larger share of the con-

sumer market through corporate partnerships means that

Fairtrade has also begun to work within the mainstream

logic of commodity markets and transnational capital. For

example, the current revision of the FLO tea standard

proposes a reduction in the premium in exchange for larger

volumes of tea sold with the Fairtrade brand so to

facilitate the incorporation of large UK blenders and

supermarket private labels into the system (FLO 2010c).

Fridell (2009) likewise warns that the lack of specification

about the type of Northern partners with which the Fair-

trade system should work (i.e., engaging both large cor-

porations and cooperatives) is actually undermining the

social justice goals of the fair trade movement. This sug-

gests that the values of relational governance might be

eroding in the downstream value chain interactions.

The case studies presented in this article contribute to

these discussions as we have illustrated diversity in the

ownership arrangements and governance of actors in the

Fairtrade certified tea industry in Tanzania. In other words,

the Fairtrade tea value chain has accommodated both

corporate and smallholder producers since its inception and

FLO had to adjust its own standards to do this effectively.

While we find that relational governance can account for

two of the four case studies presented here, there is a

caveat. These cases of relational governance also exhibit

some degree of cross investment between actors in the

value chains resulting in certain relations that appear

hierarchical or captive. In other words, the relational gov-

ernance that we see is not due to, or even facilitated by, the

codification of these values in the Fairtrade system, but

rather due to locally situated conditions of the enterprises.

Additional research may seek to trace the flow of resources

and information between these companies to determine to

what extent these relationships are indeed relational as

opposed to captive, or hierarchical. What we can also

observe is that three of the four cases were owned at one

point by CDC Group Plc. whose vision for investment in

African agriculture was that of development, rather than

profit. An interesting research project might examine the

development trajectories of CDC and non-CDC holdings in

the industry to determine differences on the basis of tea

quality and smallholder engagement.

Dolans (2008, 2010) analysis of Fairtrade tea in Kenya

revealed two fundamental problematics of Fairtrade tea:

the issue of relational governance and the effect of the

auction system on the values of fair trade. The case studies

above show that most of the trade relationships in the

Tanzanian tea industry pre-date the Fairtrade system. Put

differently, while there are forms of relational governance

that coordinate interaction among value chain actors, these

are due more to the nature of the pre-existing trading

relationships in the Tanzanian tea industry than they are

due to the value claims that Fairtrade makes in its advocacy

campaigns. The reliance on the auction system in the case

of Tanzanian tea is not as straightforward as in the case of

Kenyan tea. While there is a high reliance on the auction

for Fairtrade sales (as well as non-Fairtrade sales) of

Kenyan tea, a good portion of Tanzanian tea does not make

it to auction. This has been claimed by participants in this

study to be a result of the high costs of transporting the tea

to Kenya, the perceived discrimination against Tanzanian

tea quality at the Kenyan auction and thus their distrust

of their ability to get a fair price for their tea at the

auction, and the disappearance of the identity of Tanzanian

tea once the tea has been bought at the auction.5 Therefore,

as the case studies in this article show, many of the market

governed relationships in the Tanzanian tea industry are

also predicated on the notion of direct sales and long-term

relationships that pre-date the Fairtrade system. Moreover,

the relatively low percentage of sales to Fairtrade buyers

(average 8% of certified production in Tanzania) means

that most of the certified product is being sold through

traditional marketing channels, often at prices higher than

the Fairtrade minimum price. In other words, as Mohan

(2010) notes, the benefits claimed by Fairtrade as it is

currently enacted (direct contracts, empowerment, and

higher prices) may also be obtained from existing business

relationships between producers and buyers in the Tanza-

nian tea industry.

Acknowledgments This article is based on work supported by theNational Science Foundation under Grant# SES-0924202; and by an

Institute of International Education Fulbright Fellowship, funded by

the US Department of State. Any opinions, findings, and conclusions

5 These three complaints were repeated by research participants in

Tanzania and Kenya, as well as by buyers in the UK and Germany.

Suspicion of collusion at the Mombasa Auction has also been noted

by Van der Wal (2008) and by the East African Tea Trade

Association in reference to the introduction of an automated auction

system (EATTA 2010). The reference to the loss of identity refers to

the practice of the export of blended tea by buyers at the auction being

labeled as Kenyan tea because of the blending that takes place in

Mombasa after single estate lines are bought at the auction.


123

or recommendations expressed in this material are the authors, and

do not necessarily reflect the views of the funding agencies. The

authors thank Larry Busch, Jim Bingen, the anonymous reviewers and

the participants at the International Symposium: Innovation and

Sustainable Development in Food & Agriculture (June 28 to July 1,

2010Montpellier, France) for comments on earlier versions of this

article.

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Making Room for Smallholder Cooperatives in Tanzanian Tea Production: Can Fairtrade Do That?AbstractIntroductionOrganizing Value in AgricultureTheorizing OwnershipValue Chains and Innovation in African Agriculture

MethodsOrganizing Tanzanian TeaFairtrade Organized TeaEast Usambara Tea Company Ltd. (EUTCO)Bombay Burmah Trading Corporation Ltd.---Herkulu Estates (BBTC)Mufindi Tea and Coffee Company (MTC)Wakulima Tea Company (WATCO) and the Rungwe Smallholders Tea Growing Association (RSTGA)

DiscussionConclusionsAcknowledgmentsReferences

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