KTDA declares Sh734 million dividend for its tea farmers

The Kenya Tea Development Agency (Holdings) Limited on Friday declared a Sh 734 million dividend for its smallholder tea farmers.

The amount is for the financial year ending 30th June 2020.

This year’s declaration represents a 15 per cent increase from the previous year’s dividend of Sh683 million and comes on the back of enhanced green leaf production over the same period which led to growth in total revenues for the year.

To ensure farmers benefit from the tea value chain, KTDA has established subsidiary businesses which have led to this increased revenue.

 KTDA Holdings Limited Chairman Peter Kanyago said the company is continuously working on addressing the cost of production to enhance farmers’ earnings.

“Group revenues grew last year, driven mainly by increased tea sales volumes. Increased tea production led to high stocks at the peak of Covid-19 and exerted considerable pressure on working capital within the Group," he said.

The chairman said the Board has proposed the dividend which is a welcome performance in an otherwise very difficult year.

“We continue to address the escalating cost of production through various ongoing initiatives, the latest being the seasonal labour outsourcing and energy efficiency programs,” he said.

Group CEO Lerionka Tiampati said the average cost of production had declined by 6.6 per cent on the back of effective cost-containment measures.

“The average cost of production reduced by 6.6 per cent from Sh88.98 to Sh83.09 per kilogram of made tea mainly driven by higher cost absorption from higher volumes and cost containment measures instituted,” he said.

“The group will continue to focus on its value chains ensuring that each company remains financially strong and relevant in the chain," he added.

The CEO said enhanced stakeholder management, adoption of new technologies and diversification of products and services will be key in navigating the future.

According to him, increased focus will be placed on staff welfare, training and development as well as prudent financial management of each company in the group.

Smallholder tea farmers under KTDA management delivered 1.45 billion kilograms of green leaf for the period under review, up from 1.13 billion kilos the previous year, translating to a 13 percent growth in total revenues for the factories from Sh 69.8 billion last year to Sh79.0 billion.

The growth in green leaf production offset the reduced earnings per unit kilo of sold tea for the year which averaged USD 2.38 from USD 2.59 the previous year.

By resolution of the 54 tea factory companies’ directors last year, the dividend is paid directly to farmers’ accounts as the shareholders of the 54 Tea Factory companies that own KTDA Holdings Limited.

Previously, the dividends have been by the factories together with the final payments.

The dividend accrues from revenues realized by KTDA Holdings Ltd and its subsidiaries and is over and above what farmers earn as monthly or initial payment.