Central Kenya record tea bonus brews storm in western farmers’ cup

Tea farmers in Kiambu and Thika will earn Sh8 billion in bonuses, seven times more than what growers in the western region are expected to receive.

Latest industry performance data released on Tuesday shows the highest paid farmer affiliated to Kenya Tea Development Agency (KTDA) in Meru will pocket a net of about Sh160,000 per acre while the lowest paid grower in western will earn Sh40,000 from the same size of land.

Charles Kering from North Rift is not happy with this year’s bonus.

“It is unfair for us in the North Rift to earn Sh1.3 billion compared to our counterparts in central Kenya who will be earning seven times more than us yet all this tea is sold at the same place,” said Mr Kering, a large scale farmer in Nandi, one of the regions that registered a low bonus earnings this year.

Kaptumo Tea Factory, where Mr Kering delivers his green leaf earned Sh19.20 per kilogramme compared to Imenti factory in Meru where farmers will be pocketing Sh38.50 for the same quantity when the bonus is finally paid next month.

“We are happy with the improvement in earnings this year,” said Mugambi Nkanata, a farmer who delivers his tea to Imenti Tea Factory .

READ: Strong dollar, high prices sweeten earnings for tea farmers

But Kaptumo’s performance has improved this year with the bonus nearly doubling from Sh9 paid last year to Sh19.20 this year.

On average, growers from Kiambu and Thika will get Sh8 billion while their counterparts in Nandi and Kitale will be paid Sh1.3 billion.

Last year, Meru region received the highest bonus with Imenti Tea Factory emerging top, paying Sh26.50 per kilogramme of tea. Historically, factories in the Mount Kenya region fetch higher payments than those in western Kenya based on the factory prices at the auction as well as the quality.

Sanganyi and Ogembo/Eberege tea factories in Kisii region will receive the lowest bonus payout of Sh17 per kilogramme of tea. Mudete tea farmers in Vihiga will also receive a paltry Sh19.50.

KTDA managing director Lerionka Tiampati said the payment is based on a number of factors that inform the amount that each factory should be paid.

“The variation in bonuses depend on many factors including the cost of production and factory efficiencies,” he said.

Mr Tiampati also pointed out that the bonus paid depends on the volume of tea that has been processed and the prices that they fetched. Normally, tea prices from different factories fetch different prices depending on demand and quality at the weekly Mombasa auction.

However, the Kenya Union of Small Scale Tea Owners secretary-general George Kinyua said he plans to write a protest letter to KTDA over the low bonus payments.

“We appreciate that farmers are getting more than last year, but we expected Sh50 bonus based on the market. The payment should take into consideration the farmers’ costs too,” Mr Kinyua said.

In March this year, tea from western Kenya for the first time in 20 years attracted a higher average price than that from Meru which has been a favourite at the Mombasa auction because of its deep colouration, which is one of the attributes on which traders base their offer prices as consumers have a high preference for it.

“Buyers like tea with deep colour and this was the main reason why the Kisii tea fetched high prices in March compared to the ones from Meru,” said Peter Kimanga of the Global Commodities Holdings.

The price of a kilogramme from Kisii and Nandi regions fetched $3.90 (Sh354) during that month at the auction with the one from Meru trading at $2.70 (Sh245). The Meru region has traditionally produced the most expensive teas as realised from sales at the auction.

The move, though short lived, saw traders from Middle East and Pakistan scramble for the beverage from western Kenya, helping to push up the price.

Up to 95 per cent of tea from Kenya is exported to the world market, with Kenyans consuming a paltry five per cent.

This is one of the reasons why the tea earnings improved from Sh52 billion last year to Sh64 billion in the year 2014/2015 as the dollar the strong dollar acted in favour of the exporters. The shilling has been weakening against the dollar since the beginning of the year and it is currently trading at Sh105 against the greenback, coming as a relief to the exporters.

Kenya exports 95 per cent of its tea to the world market.

Additional reporting by David Muchui