Tea farmers will this year earn the highest bonus in five years, after the Kenya Tea Development Agency yesterday announced a record Sh61.99 billion payment.
This follows a jump in total revenue for smallholder tea farmers in the 2015-16 financial year, which closed at Sh83.97 billion, compared to Sh63.53 billion in the previous year, a 32.2 per cent increase.
Out of the Sh84 billion, 75 per cent (Sh61.99 billion) will be paid out to farmers at an average of Sh50.26 per kilo of green leaf delivered to the 67 KTDA-managed factories, with the remaining 25 per cent covering the cost of production, the authority said.
This is a 43.3 per cent increase from Sh43.25 billion paid to farmers as bonus last year.
KTDA chief executive Lerionka Tiampati attributed the high bonus payment to improved tea prices, increased tea volumes coupled with good weather.
A strong dollar against the Kenya shilling boosted earnings as the commodity trades on dollars at the Mombasa Tea Auction.
“The average net selling price per kilo increased to $3.01(Sh304.57 ) in 2015-16 up from $2.63 (Sh266.12) in 2014-15, a 15 per cent increase,” Tiampati said. “We (KTDA) have been doing better at the auction where prices have reached highs of over $4 (Sh404.74 ) per kilo of made tea for some of the primary grades.”
Growers have already received Sh17.27 billion as initial monthly payment at an average of Sh14 per kilo.
“The remaining sum of Sh44.72 billion will be paid out to farmers as second payment at an average rate of Sh36.26 per kilo of green leaf,” Tiampati said.
This is a 31.33 per cent increase over the 2014-15 average of Sh27.61 per kilo.
The authority also pegged the high earnings to an increase in demand for tea in new markets such as US, Australia and Iran, and dominant existing markets of Egypt and Pakistan.
The 2015-16 green leaf volumes reached a record 1.23 billion kilos, compared to 1.04 billion last year, the highest in the history of tea production by smallholder tea farmers.
Tea farmers earned Sh35.5 billion in 2013-14, Sh51.3 billion in 2012-13 and Sh45.3 billion in 2011-12.
The authority has, however, warned of lower prices in the second half of the year “because of the forces of demand and supply”.
KTDA board chairman Peter Kanyago accused politicians and ‘disgruntled individuals’ of “trying to interfere with KTDA model of work”.