Smallholder tea farmers affiliated to the Kenya Tea Development Agency (KTDA), will receive their bonus payment at the end of October.
This follows the conclusion of meetings by directors of the 54 KTDA managed tea factories on Friday last week.
In a statement, KTDA Chairman, David Ichoho, said that factory directors had reviewed the performance of their companies over the last 12 months and declared the second payment rates to the respective farmers.
“Generally, the rate per kilo does not vary much from those of the previous Financial Year,” said the Chairman.
Bonus rates are determined by the factory’s income for the year, the quality of leaf delivered to the factory, the cost of production and the average price of tea that the factory fetched at the market.
These costs are then deducted from the factory’s income and the balance paid to farmers as bonus.
The announcement comes at a time when the tea sector recorded an 8.3 per cent drop in the CTC tea prices at the Mombasa auction from an average of 2.38 United States dollars in the last Financial Year to 2.18 dollars in the Financial Year 2020/2021.
KTDA says that the drop in prices was occasioned by oversupply of tea in markets, a scenario that has been playing out since 2018.
The Agency has also blamed price drop on the business disruptions occasioned by the Covid-19 pandemic that not only caused global shipping challenges, but also reduced the demand for tea in key tea consuming countries.
“The relatively favorable exchange rate of the Kenya Shilling against the US dollar has ,however, helped shore up earnings from the sale of tea which is generally dollar dominated,” said Ichoho.
The current exchange rate for the US dollar against the Kenyan Shillings stands at Sh110.
The Agriculture Cabinet Secretary, Peter Munya, asked tea factories to reduce their cost of production as a way of maximizing earnings for tea farmers.
Speaking in Meru County, Munya said that most factories were incurring high production costs which were eating into the farmers’ income.
To mitigate this, Ichoho, said that the newly constituted Board was working to ensure that KTDA managed factories were implementing energy efficient changes that have seen the amount of energy used to produce a kilo of tea drop by 15 per cent.
To further cushion farmers from low tea prices, Ichoho said that KTDA had set a minimum price for produce delivered to the Agency.
According to the Chairman, already prices of tea under the minimum price have improved significantly, heralding better returns for farmers at the end of the current financial year ending June next year.
“We have embarked on various reforms and initiatives aimed at increasing money to farmers. The reforms are already bearing fruits and farmers should look forward to higher returns in the coming months,” said Ichoho.