Tea farmers to earn more despite prolonged drought

By Timothy Makokha

Small-scale tea farmers are poised for increased earnings despite prolonged drought that has reduced export volumes.

Kenya Tea Development Agency (KTDA) Managing Director, Lerionka Tiampati, whose agency manages 60 tea factories, said the drought affected almost all tea growing countries, including India, Sri Lanka and China, occasioning a shortage in the international market.

The shrinking world supply against growing demand, Tiampati said in a press statement, led to improved prices at the auction.

Auction prices

"Since direct sales are often pegged to auction prices, the prices were good across the board," Tiampati said.

Tea production has been affected by the long dry spell experienced across most parts of the country. Photo: File/Standard

Figures indicate that prices have increased by up to 30 per cent in the last one year, averaging $2.50 per kg of made tea and reaching a high of over $3.50 per kg of made tea for primary grades at recent auctions.

This, combined with a favourable exchange rate regime, could see tea farmers earn more than in previous years.

Tiampati said the severe drought had denied farmers an opportunity to benefit from the improved prices.

Tiampati was, however, quick to point out that future projections depended on how long the current climatic conditions last.

"Should the rains come as predicted by the Meteorological Department, it will take close to a month for tea bushes to recover from the long dry spell," he said.

Diversify operations

"An increase in volume could lead to over supply, which will lower global auction prices."

KTDA has this year diversified its operations beyond tea processing and marketing to match the changing market dynamics.

In June, the tea agency signed a power purchase pact with the Kenya Power and Lighting Company to enable Imenti Tea Factory — which it manages — sell surplus power from its mini-hydro project to the national grid.

The agency is also developing a 17MW power project on Gura River in Nyeri that will benefit four tea factories. Ten other sites whose feasibility studies were sponsored by the Ministry of Energy are also being considered for development.

To consolidate these efforts, KTDA has announced the formation of a subsidiary dealing specifically in power generation.

The agency has also registered a micro-finance firm, Greenland Fedha Ltd (GFL), a non-deposit-taking limited liability company with an initial share capital of Sh160 million.

The micro-finance will offer loans to tea farmers at an interest rate of 8.31 per cent per annum.

The profits from these initiatives will be paid as dividends to small-scale tea farmers who own KTDA through their factories

Automate processes

KTDA has also automated operations at the factories to reduce costs and improve efficiency in tea processing.

Continuous Fermentation Units (CFUs), an addition to the tea processing chain, have been installed in all factories across the country.

KTDA has further adopted the Electronic Weighing Solutions to ensure accuracy of green leaf data captured and curb falsification of weights at buying centres.