Agriculture Cabinet Secretary Mithika Linturi has announced payment of Sh5.5 billion to tea farmers to be paid as an early bonus.
Mr Linturi also explained that the money being paid out by the Kenya Tea Development Authority (KTDA) to farmers is not a loan.
A breakdown of how this profit was realised in the sector, however, was not provided by the CS, who said it will be delivered later.
“This money is not borrowed. It is proceeds from the sale of tea,” said the CS accompanied KTDA managers during the press conference, including Chief Executive Officer Wilson Muthaura.
The CS was referring to an ongoing probe at the ministry where the agency is being investigated for taking an Sh18.2 billion loan to pay farmers an early bonus in 2021 just before the August 9, 2022, General Election.
This bonus payment is usually paid towards the end of the year.
The Sh18.2 billion is reported to have been facilitated by the agency’s shares which were used as a guarantee.
While the CS has been on record that the timing and borrowing of the loan were wrong, and further pointed fingers at the Jubilee administration for puppeteering the agency to take the loan, yesterday, he appeared to absolve KTDA of the questionable decision.
“Last time, there was some aspect of borrowing money but when you look at the arithmetic, it was necessary at the time because some farmers needed to be supported,” said the CS.
The Sh5.5 billion being paid out is more compared to the same period last year when the figure was Sh2.9 billion.
About 650,000 farmers are set to benefit.
Normally, this payment is made around March, but the CS said he indulged the KTDA management during the AGM and proposed the money be paid out in January to help farmers mitigate the biting high cost of living.
Of the Sh5.5 billion, Sh2.7 billion is payment as mini bonus for factories whose directors passed resolutions to pay (mini bonuses) while the balance amounting to Sh2.8 billion will go towards green leaf deliveries for December.
The bonus covers July to December 2022.
“Farmers have been waiting for this payment and we have made it right before schools open, to enable our farmers to meet their back-to-school obligations alongside other personal obligations,” said KTDA chairman David Ichoho.
He added: “As part of the reforms, we promised our farmers that they will receive their pay by the fifth of the month, a promise we have dutifully kept. We have delayed slightly this month to enable us to compute proper amounts.”
The bulk of 600,000 small-scale tea farmers countrywide will share the Sh5.5 billion, which will hit banks by Friday morning.
And the CS appeared to be seeking a different path from that of his predecessor Peter Munya, saying the government would steer clear of running businesses, but provide an enabling opportunity for the private sector to thrive.
He promised the government’s assistance in setting up 11 processing lines for high-earning orthodox teas in some of the 71 tea processing factories run by KTDA for smallholder farmers.
“The government will also encourage KTDA factories to invest in common user facilities at the Special Export Processing Zones including Dogo Kundu in Mombasa to grow the percentage of value-added exports to 50 per cent,” added Linturi.
He told stakeholders in the sub-sector to use Alternative Dispute Resolution (ADR) mechanism to solve the litigation cases between current officeholders and those removed during the reforms instituted by Mr Munya.
“I am even volunteering to be the broker for the settlement of these draining disputes,” Linturi added.
Mr Ichoho said the agency has this time around used proceeds of tea sales to pay interim second payments, unlike last year when it had to borrow.
He added that the international tea market was looking promising and farmers could earn better rates than last year.