Farmers eye multinationals after KTDA withholds bonus
Workers pick tea. KTDA reckons that bonus payment for this year, which is paid after June, will be lowest in four years. FILE
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The KTDA factories —which are owned by farmers — are buying green leaf at Sh14 per kilo while the multinationals pay an average of Sh25.
Farmers in Kericho County are threatening to ditch the Kenya Tea Development Agency (KTDA) for multinational companies as the effects of dropping green leaf prices begin to bite.
The Kenya Union of Small-Scale Tea Owners (Kussto) Joel Chepkwony said multinational tea factories including James Finlay, George Williamson and Unilever Tea are paying double the price offered by KTDA-owned factories for a kilo of green leaf.
The KTDA factories —which are owned by farmers — are buying green leaf at Sh14 per kilo while the multinationals pay an average of Sh25.
“Farmers want money. It is difficult to understand how the price of tea dropped from a peak of Sh45 per kilo mid last year to Sh14. Farmers are now transferring their tea to private processors because they have better prices,” he said.
The Sh45 include the bonus of Sh31 per kilo. KTDA reckons that bonus payment for this year, which is paid after June, will be lowest in four years.
The agency failed to pay the Sh5 per kilo mini-boss that is usually made this month due to a supply glut and disturbances in major markets.
This cut the value of exports to $2 (Sh170) per kilogramme last week from $3.09 (Sh268) per kilogramme in 2012 .Multinationals do not pay bonuses and spread their payment evenly through the year. This means that KTDA pays higher rates than the multinationals in a year it declares a bonus above Sh15 per kilogramme.
The agency paid a bonus of Sh32 per kilogramme in 2012.
Mr Chepkwony is asking the private investors to join the tea processing business, adding that it will increase competition and stabilise tea prices.
“What I am suggesting now is that KTDA should consider splitting the payment of bonuses into two so that farmers can receive bonuses every year and not have to remain in poverty,” he said.
Mr Chepkwony also wants the KTDA board to be streamlined and the number of directors reduced to cut costs.
Kiprotich Yegon from Bureti sub-county, complained about deductions on tea processed by KTDA factories.
“We do not exactly understand how the Sh2 that is deducted as development levy from the payment made for every kilo of green tea by the KTDA is used.
Multinational tea factories fund their on projects,” said Mr Yegon.
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