Tea farmers brace for 30 per cent decline in KTDA bonus

The current prices are the lowest the State agency has fetched in 10 years.

Kenya Tea Development Agency (KTDA) has said bonus payments for small-scale tea farmers will drop by 30 per cent this year due to a glut.

Speaking during the ASK Show in Kabiruini Showgrounds in Nyeri County, KTDA Chairman Peter Kanyago said low prices for tea locally and internationally had also led to the drop in payments.

The current prices are the lowest the State agency has fetched in 10 years.

“The bonus will be lower than what was paid last year. Tea prices worldwide have been on the decline,” Mr Kanyago said.

“Most tea producers have also not been able to manage their costs. This, of course, leads to low returns for the multinational tea companies as well as small-scale tea farmers,” he added.

New lines

Kanyago said political and economic instability in major tea-buying countries had adversely affected demand for the cash crop.

He pointed at economic instabilities in Pakistan and Egypt, which are the leading importers of Kenyan tea. The two account for 40 per cent and 15 per cent of the Kenyan tea export respectively. 

Also, political tensions in Sudan, and the uncertainty associated with Brexit have affected sale of tea in the United Kingdom, which is the third largest importer of Kenyan tea. 

KTDA is now leveraging on new production lines in 10 factories in the country to produce new varieties of orthodox tea.

Some of the factories producing the tea are Gitugi, Chinga, Thumaita, Michi Mikuru in Imenti, Kiru in Murang’a, Itumbi, Kimunye and Kagwe. 

Orthodox tea

“Each of these factories will produce at least 2.5 million kilos of orthodox tea,” Kanyango said. 

He noted that the intensified campaign to shift from traditional black tea to orthodox tea was because the latter had potential to fetch higher prices. 

Currently, a kilogramme of tea is selling at $2.4 at the Mombasa auction (Sh248.90) compared to $4 (Sh414.84) previously. 

“The prices for orthodox tea are slightly higher compared to those for the traditional black tea, and that is why we intend to increase the number of factories producing orthodox tea from 10 to 20 by the end of the year,” Kanyago said. 

He noted that in this financial year tea prices at the Mombasa auction were improving, meaning that farmers’ fortunes would change in next year’s bonus pay.