GRATUITY

Tea farmers to know bonus payout next week

Bonuses are projected to be low compared to last year as tea prices slumped to their lowest in the last five years.

In Summary

• At least 615,000 small-holder farmers served by 69 factories are expecting bonuses for 2018/19.

• Overproduction as a result of increased planting,husbandry, rehabilitation and low quality of Kenyan tea has been blamed for poor prices, which comes back to dent farmers' bonuses.

Tea farmers in Kisii county uproot crop following low returns.
Tea farmers in Kisii county uproot crop following low returns.
Image: COURTESY

Tea farmers will know their 2019 bonus pay next week, Kenya Tea Development Agency (KTDA) has said.

The payments might however not be good in view of the slump in tea prices to their lowest in the last five years, with preliminary reports indicating it is likely to drop by 30 per cent.

KTDA general manager-sales and marketing John Bett yesterday all the 69 factories across the country have finalised their accounts and agreed on the bonus rates.

Factories have made their decisions on how much they will be paying. We are currently compiling the data before it is officially communicated,” Bett told the Star in Nairobi, on the sidelines of a media briefing by the East African Tea Trade Association(EATTA).

In 2017/2018 bonus was at Sh65.10 per kilogramme with farmers countrywide receiving Sh57.4 billion.

The highest bonus was however in 2016 where farmers earned a record Sh61.99 billion, the highest in five years, getting up to Sh70 per kilo.

At least 615,000 small-holder farmers will receive bonuses this year.

Last year the highest bonus was paid by Murang'a Tea Factory, where growers earned Sh52.10 per kilo. In Meru region, payments were between Sh26.05 and Sh35.10 a kilo.

Rift Valley farmers last year earned an average Sh30 per kilo. Farmers in Kisii earned an average Sh23 per kilo which is likely to go down below Sh20.

This year's earning are likely to suffer a blow from low auction prices.

EATTA data shows in July 2019, Mombasa Tea Auction witnessed the lowest average price of US$ 1.76(Sh 182.76) per kilo compared to US$2.26(Sh234.68) per kilo in a similar period last year.

Private tea firms have also been reporting low sales and losses.

“The current low returns to the multinational tea companies and the KTDA small-scale tea farmers in the form of the annual final payments is a reflection on the increased costs of production and the low international prices.”EATTA chairman Gideon Mugo said.

He said some tea producers have actually posted losses.

“While tea prices have been on the decline or stagnated, the tea industry is grappling with increased costs of production such as labour, fertiliser, electricity and fuel," he said.

Mugo said with the prevailing low average price of tea most tea producers are not able to sustain the costs of production.

Prices at the weekly auction have however gained to US$ 2.05(Sh212.87).

Overproduction of tea as a result of increased planting,husbandry, rehabilitation and low quality of Kenyan tea has also been blamed for poor prices, which comes back to dent farmers' bonuses.

This requires a need to shift towards premium tea and high value specialty teas as consumers are more knowledgeable about tea varieties and origin,” EATTA managing director Edward Mudibo said.

Tea is grown in 21 counties with 95 per cent of the country's produces going into the export market , mainly Pakistan, Egypt, UK, Sudan Yemen and UAE.

The country's Tea production was 490 million in 2018, 439 million kilos in 2017 and reached an all-time high of 473 million kilos in 2016.