POOR EARNINGS

Blow to tea farmers as bonus drops 25%

Tea farmers will get an average Sh41.27 per kilogramme of green leaf compared to Sh52.83 last year

In Summary
  • KTDA which manages 69 factories in 21 tea growing counties says it earned Sh69.77 billion in 2018-19 down from  Sh85.74 billion the previous year.
  • The agency says it will pay farmers Sh46.45 billion, a 25.5 per cent drop, compared to Sh62.35 billion paid in the 2017-18 financial year
A section of tea farmers in Nyamira's Tombe area uproot their crop on Friday in protest against poor bonus earnings
FED UP: A section of tea farmers in Nyamira's Tombe area uproot their crop on Friday in protest against poor bonus earnings
Image: MAGATI OBEBO

Tea farmers  will take home an average Sh41.27 per kilogramme of green leaf in the 2018-19 bonus payment announced yesterday as earnings drop for the second year.

This comes in the wake of increased production which saw the year close with 481 million kilos compared to 477 million kilos produced the previous year, with the increase blamed for a low bonus payout.

This year’s average per kilo is a drop compared to last year when farmers took home an average Sh52.83. In 2017, farmers earned an average Sh58.76 per kilo, the highest in the last three years.

 

Kenya Tea Development Agency yesterday announced that this year, it will be paying farmers a total of Sh46.45 billion, a 25.5 per cent drop, compared to Sh62.35 billion paid in the 2017-18 financial year.

Farmers received Sh57.44 billion in 2017 and Sh61.91 billion in 2016, the highest in five years where farmers earned a record Sh70 per kilo.

KTDA chief executive officer Lerionka Tiampati pegged the low returns to increased global prices against a depressed market, which has hurt prices.

“Most tea producing countries have registered increased production while importing markets have experienced political and economic challenges,” Tiampati said, noting that Kenya exports 96 per cent of its produce.

The about 615,000 small-holder KTDA farmers had already received Sh17.69 billion in an initial payment. The second payment will see them take home a total Sh28.76 billion which is almost half the Sh44.33 billion received last year.

The agency which manages 69 factories in 21 tea growing counties yesterday said it earned Sh69.77 billion last year, a 18.6 per cent drop compared to Sh85.74 billion last year. This is on a reduced uptake of tea by key markets.

“ Pakistan, Egypt, UK and UAE and Sudan remain Kenya’s key export destinations for the black CTC tea type processed in Kenya.  These countries have had significant currency devaluation due to political, economic challenges with Sudan, Pakistan and Egypt and UK registering 70 per cent, 50 per cent, 20 per cent and 20 per cent drop respectively,” Tiampati said.

 

 Tea being a commodity traded in US dollars, the currency devaluation reduces the purchasing power of the consuming population.

At the Mombasa auction, KTDA tea averaged $2.59 (Sh268.86) per kilo in the year to June 2019, a drop compared to $3.14 (Sh325.95) the previous year.

 “Resumption of economic sanctions by the United States of America on Iran cut off a substantial market for our teas,” Tiampati said.

Poor quality of tea has also been blamed for low prices at the auction.

“We need to focus on the quality of our teas to remain competitive,” East Africa Tea Trade Association chairman Gideon Mugo told the Star.

In July this year, Kenyan tea fetched the lowest price in five years trading at an average $ 1.76 (Sh 182.70) per kilo at the auction.

This week’s average price was $2.15 (Sh223.18), a slight increase from $2.14(Sh222.14) last week.

“Pakistan packers lent strong support and were dominant while Afghanistan showed more interest and were dominant. There were more inquiries from Yemen, other middle eastern countries and Kazakhstan,” EATTA managing director Edward Mudibo said.