Tea farmers to get Sh5.5bn in pay, bonus
Agriculture CS Mithika Linturi (left) and KTDA chairman David Ichoho at a media briefing in Nairobi on January 12, 2023, where it was announced that tea farmers will receive Sh5.5 billion for green leaf deliveries and a mini bonus.
Tea farmers will receive a mini bonus of Sh2.7 billion for the first half of the financial year 2022/23 following approval of payment by the Kenya Tea Development Agency (KTDA).
The agency will also pay Sh2.8 billion to the farmers for green leaf delivered to its managed factories in December, which brings the total payment to farmers to Sh5.5 billion.
Farmers will be paid between Sh5 and Sh10 as a mini bonus per kilo of green leaf delivered to their factories for the six months to December 31, 2022, KTDA announced yesterday.
The agency said only farmers in factories in zones 1 to 9 will receive the mini bonuses, with those in zones 10 to 12 traditionally holding off from paying, instead making a singular payment as part of the final bonus later in the year.
“Of this amount, Sh2.7 billion is the payment with respect to mini bonuses for the factories whose directors passed resolutions to pay mini bonuses to their farmers. The balance of Sh2.8 billion will go towards paying farmers for the December green leaf delivered to factories,” said the agency.
KTDA said 449 million kilogrammes of green leaf were delivered to their factories by farmers over the six-month period during which average tea prices at the auction stood at Sh326 per kilogramme of made tea compared to Sh306 in the same period in 2020/2021.
“Farmers can expect to receive payment in their accounts in the next few days based on respective banks’ processes and timelines,” said the agency.
KTDA has come under scrutiny following revelations that it took a loan of Sh18.2 billion to pay farmers an early bonus last year ahead of the August polls.
Yesterday, Agriculture Cabinet Secretary Mithika Linturi appeared to confirm the loan even as he said the early bonus will help the tea farmers to meet their financial needs, especially payment of fees ahead of the official opening of schools later this month.
“This money will help farmers to better manage their financial affairs during this difficult period,” said Mr Linturi. “It (the bonus) is not borrowed money, it proceeds from tea sales. Last time there was an aspect of borrowing here and there but this time the money is fully from tea sales.”
KTDA changes
The payment of mini bonuses is part of recent changes by KTDA that allow farmers to spread their earnings throughout the years.
Tea farmers have benefited from a weak shilling that has increased their earnings from exports of the beverage. Data from the Tea Directorate shows the farmers earned Sh5 billion more from sales between January and August last year, mainly due to higher unit costs and a weak shilling.
The directorate said the earnings from tea exports rose to Sh88 billion in the period, up from Sh83 billion a year earlier, in a period during which the average exchange rate for the dollar was Sh116 in comparison to Sh108.75 previously.
The unit price in the first eight months of the year rose to $2.51 from a low of $1.95 in 2021, recording a 28 per cent growth that helped to offset the drop in exported volumes of tea, which reduced from 389 million kilos in eight months of 2021 to 303 million kilos in the review period.
“We are pleased to announce that the payment for the December 2022 green leaf delivery by our farmers has been made this week, together with the mini bonus for the period July to December 2022,” said KTDA Chairman David Ichoho yesterday.
“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 obligations,” he said.
