Kenya Tea Development Agency (KTDA) has promised to pay farmers no less than 50 per cent of their deliveries as monthly payments with the balance being paid out as annual bonuses something which will see the producers, mainly small scale, increase their annual income.
This follows Tuesday directive by President Uhuru Kenyatta which will see the industry undergo radical changes that include an increase in farmers’ earnings by reducing the income lost to middlemen estimated at Sh50 per kilo and value addition.
The industry has been grappling with numerous challenges ranging from corruption in the agencies that manage the industry to the proliferation of brokers who make a killing at the expense of farmers.
These have resulted in declining earnings for farmers, with last year having had the worst returns for farmers in close to a decade. Low earnings have seen frustrated farmers uproot tea bushes.
“The directives will help rescue the sector and put it back to its place as a leading source of foreign exchange and a major employer in Kenya,” said KTDA a statement adding that the agency is committed to working with the ministry to achieve audacious goal of the president.
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There was uproar last year in tea-growing regions when KTDA announced a 25 per cent dip in earnings for the 2018/2019 financial year. Farmers whose produce is sold through the agency earned Sh46.45 billion compared to Sh62 billion over a similar period in 2017/2018.
The last time tea earnings were this low was in 2014 when farmers earned Sh35.5 billion. Payment to smallholder tea farmers is done in two tranches, with an initial payment made every month while a final payment is made after the close of the financial year, usually around October.
This second payment – known as the tea bonus – is popular and usually brings life to tea-growing regions. Last year, however, this payment dipped 36 per cent to Sh28 billion, compared to Sh46 billion in the previous year.
Uhuru also wants KTDA to pay farmers at least 50 per cent of their deliveries as monthly (initial) payments while the balance will be paid as annual bonus. Last year, KTDA paid about 36 per cent (Sh17 billion) as monthly payments while the balance of 64 per cent (Sh28 billion) was paid as annual bonus. In a statement, KTDA said it was ready to “work with the various State agencies as directed by His Excellency the President.”
Uhuru also decried the control that middlemen have over farmers, noting while farmers could be earning up to Sh91 per kilogramme of tea, they were making Sh41 while the balance of Sh50 – more than half – is taken to brokers.
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The President now wants State agencies to rein in the unscrupulous businesses and individuals that do not own farms or grow tea bushes but end up earning more than farmers.
“We are optimistic about the gazettement of the Tea Regulations 2019, the establishment of the Green Leaf Pricing Formula Committee and establishment of a competence driven Kenya Tea Council as directed by the President within the next 2 weeks. This will create a solid foundation for the required policy framework for the next phase of the Kenya tea Sector,” said KTDA.