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Tea farmers earn Sh649m dividends as KTDA defends sector

Tea farmers to receive payments from their factories

In Summary

•There is a wide call for changes in law and management of the country’s tea sector.

•Yesterday, KTDA dismissed claims that there has not been payment of dividends to farmers.

Workers offload green tea at a Nyeri factory/FILE
Workers offload green tea at a Nyeri factory/FILE

Tea farmers in Kenya will earn Sh649 million as their dividends for their full-year crop delivery. the Kenya Tea Development Agency announced yesterday.

The agency defended the payout even as momentum for regulatory and management changes within the tea sector picks up.

Smallholder tea farmers affiliated to KTDA’s 54 managed factories will receive the payments from their tea factories, being dividends received from KTDA Holdings Ltd and its subsidiaries for the financial year ending June 30, 2019, it said.

 

KTDA dismissed claims that there has been no payment of dividends to farmers.

“In the recent past there have been allegations in sections of the media to the effect that there have been no dividends received by factories and tea farmers from their investments in KTDA Holdings and its subsidiaries,” it said in a statement.

“KTDA’s annual audited accounts indicate that dividends have consistently been paid to its shareholders who are the factory companies,” the agency said.

The tea factories, through resolutions of their directors, have resolved to pass the dividends received from KTDA holdings directly to the farmers who are the shareholders of the tea factories that own KTDA (H) Ltd.

“In observance of corporate governance rules, the payslips farmers will receive from their respective factory companies will now show the actual dividend payments accrued from the subsidiaries, separate from normal monthly payments for the delivery of tea,” KTDA said.

The subsidiaries are KTDA Management Services that deals with the management of the tea factories, KTDA Power which is involved in power generation, Greenland Fedha which facilitates access to credit for farmers and KETEPA, which is KTDA’s value addition arm that blends and packages tea for local consumption and export.

 Others are Chai Trading Company Limited, Majani Insurance Brokers, Tea Machinery and Engineering Company Ltd, and KTDA Foundation.

 
 

Over the last five years, factory companies have received more than Sh3.7 billion in dividends from KTDA and its subsidiaries’ business activities, the amounts having been previously consolidated. 

“The payment is over and above what farmers earn as a monthly or initial payment,” it said.

A private holding company owned by small-holder tea farmers, KTDA Holdings Ltd is responsible for over 60 percent of the tea produced in Kenya.

There have been calls for the restructuring of KTDA and changes in the country’s tea regulations to protect farmers from exploitation.

In January, President Uhuru Kenyatta said conflict of interest inside KTDA has contributed to the problems facing tea farmers in the country.

He observed that KTDA and the entire marketing structure of the tea sector need to be restructured in order to ensure that farmers get desired pay from the product.

"Farmers who would be earning about Sh91 per kilogram for their tea are currently earning about Sh41 with Sh50 per kilogram going to brokers and middlemen," Uhuru noted.

In October last year, farmers took home an average Sh41.27 per kilogramme of green leaf in the 2018-19 bonus, a drop from Sh52.83 the previous year and an average Sh58.76 per kilo in 2017.

The drop was blamed on over production and global oversupply which led low market prices.

KTDA paid 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.

Agriculture Cabinet Secretary Peter Munya recently unveiled the proposed Crops (Tea Industry) Regulations 2020 to revamp the sector.

KTDA lawyer, Benson Millimo, however in a rejoinder said the regulations instead increase bureaucracy.