FARMING

KTDA defends itself on bonus payments

In Summary

•In October 2019, small-scale tea farmers in the Rift Valley wanted KTDA directors removed over alleged mismanagement that led to a low bonus payment.

•In the financial year that ended on 31 June 2019, KTDA Holdings declared a dividend of Sh683 million to its 54 tea factory company shareholders.

Tea pickers at Iria-ini Primary School in Othaya, Nyeri county.
Tea pickers at Iria-ini Primary School in Othaya, Nyeri county.
Image: EUTYCAS MUCHIRI

Kenya Tea Development Agency(KTDA) has absolved itself from blame for low tea prices at farm level.

In October 2019, small-scale tea farmers in the Rift Valley wanted KTDA directors removed over alleged mismanagement that led to a low bonus payment.

“With our business model, dividends are paid to KTDA Holdings and down the pipeline to the tea factory companies and to their registered farmers,” KTDA said in a statement.

It said this model of ownership is similar to other farmer-owned organisations globally which have invested in entities in the value chain, for the benefit of their shareholders.

KTDA said the business model was influenced by intense lobbying by smallholder farmers together with stakeholders from tea growing areas to revert the ownership and management of the sector to the farmers through the privatisation of KTDA.

Under the model, shareholders of tea factories are the tea farmers themselves; the 54 tea factory companies own KTDA Holdings as corporate shareholders.

In the financial year that ended on 31 June 2019, KTDA Holdings declared a dividend of Sh683 million to its 54 tea factory company shareholders.

KTDA said the distributed dividends are reflected in respective books of accounts of the 54 Tea Factory Companies, based on their shares in KTDA Holdings.

Tea farmers are however set to benefit from the President’s reforms in his recent state address.

The reforms will involve the restructuring of KTDA to address the issue of low tea prices, delayed payments, low initial payment and fluctuations in net income of tea farmers.

 

“It is clear the governance of KTDA and entire marketing of tea will require to be restructured if we are to assure our tea farmers get more revenue from their tea sales,” the President said.

Kenya remains a leading exporter of Black tea, accounting for nearly 20 percent of total global exports.