Tea farmers get annual bonus

A tea farmer on a farm in Murang'a County. [Kibata Kihu/Standard]

Factories managed by the Kenya Tea Development Agency Management Services (KTDA-MS) have this week released Sh27.62 billion being the final payment to tea farmers for the financial year ended June 30, 2020.

The bonus takes the total payment for the year to Sh51.85 billion, up from Sh46.48 billion last year, an 11.6 per cent increase. 

The growth has attributed to an increased green leaf production, which grew by 29 per cent for the year to stand at 1.45 billion kilogrammes compared to 1.13 billion kilogrammes over a similar period last year, as well as a more favourable exchange rate.

“This is despite the average price for a kilo of sold tea falling by 8.1 per cent to an average 12-year low of $2.38 (Sh257) per kilo compared to $2.59 (Sh279) per kilo in 2019,” KTDA said in a statement yesterday. 

“As a result of the growth in green tea production due to favourable weather conditions, the volume of made tea produced by the factories increased to 326 million kilos for the year from 267 million last year.”

On average, 4.5kg of green leaf make one kilo of made tea, according to KTDA.  

Payment to farmers is done monthly and at the end of a financial year after respective factory boards have reviewed and approved the year’s audited financial accounts.

In determining the final payment, individual companies consider the revenue generated from tea sales, dividends from KTDA Holdings, interest earned from deposits and any other income, less the cost of operations, dividends payable to their shareholders/farmers and taxes to government if any, for the year.  

“Other than for a few factories whose crop did not increase materially for various reasons, on average, tea farmers will take home higher earnings this year on the back of increased tea production due to good weather, which was further supported by a favourable currency exchange environment,” said KTDA-MS Managing Director Alfred Njagi.

The business environment was characterised by lower purchasing power and Covid-19 disruptions.