Region five, which comprises Kericho and Bomet will pay their farmers a total of Sh13 billion followed by region one that covers factories in Kiambu and Thika that will pay its farmers a total of Sh12 billion.
Absolute earnings to small-holder tea farmers affiliated to the Kenya Tea Development Agency (KTDA) leapt in the year to June, signalling improved efficiency in factory operations.
The percentage of revenue paid to farmers in 2016 climbed to 75 per cent from 71 per cent last year, translating into better earnings for growers, data by the agency showed.
Factories in the Kiambu/Thika and Meru region posted the biggest efficiency with the average percentage of revenue to farmers coming at 79 per cent and 78 per cent respectively.
In terms of individual factories Meru region’s Kionyo was the most efficient countrywide this year with 86 per cent of generated revenue paid to farmers. It was followed closely by Kirinyanga’s Kangaita tea factory at 85 per cent, Kericho’s Momul (84 per cent) and Murang’a’s Ngere (83 per cent).
Other top performing factories in terms of cost efficiency were Kagwe, Makomboki and Rukuriri, all which paid 82 per cent of gross revenues to farmers.
“You will find out that some factories cost of production is higher, while others are low. These is one of the reasons why you would find that the bonus that farmers’ earn vary from one region to another,’ said Lerionka Tiampati, managing director KTDA.
A review of the overall payout structure showed that the percentage of revenue paid to farmers in 2016 improved because of cuts in administrative and electricity costs. For example, in 2016 the administrative cost was down to just one per cent of total revenue down from five per cent last year. Electricity costs also dropped to three per cent of revenue in 2016, down from four per cent the previous year.
Overall, factories in the Mount Kenya and western Kenya regions once again registered significant growth in their revenue. According to the industry figures, Mogosiek/Kobel/Boito factory which is in region five received a total payment of Sh2.2 billion, emerging as the top earner in this year’s ranking.
Ngere tea factory, which is in region one, will see farmers pocket Sh1.9 billion in earnings, an increase of 44 per cent from the last year’s pay.
The highest paid farmer will this year earn a net of Sh165,000, up from Sh160,000 that the top grower received last year per acre.
There was a significant growth in revenue from all regions in 2016 earnings with all the factories registering a cumulative average of 43 per cent on increment in earnings.
Kitale and Kapsebet, which fall in region seven registered a 50 per cent growth with the amount payable to farmers doubling from Sh1 billion last year to Sh2 billion in 2016.
Production costs, however, are still a pain for most farmers. Plucking remains the highest cost of tea production costing farmers Sh31,500 per acre. This is followed by fertiliser where growers use five bags per acre, bringing the total cost to Sh11,000.
Kericho and Bomet
Region five, which comprises Kericho and Bomet will pay their farmers a total of Sh13 billion followed by region one that covers factories in Kiambu and Thika that will pay its farmers a total of Sh12 billion.
Last year growers from Kiambu and Thika got Sh8 billion while their counterparts in Kericho and Bomet earned Sh9 billion on average, signifying a growth of 47 per cent and 44 per cent respectively.
Farmers’ gross earnings in the year to June grew by 32 per cent to Sh84 billion from Sh63 billion in the previous financial year.
The improved revenue will see the agency pay growers a total of 75 per cent of the earnings, which is an improvement from last year’s 71 per cent. The improved earnings have been attributed to cost management, favourable exchange rate and good international price.
According to KTDA, the cost of production in 2016 dropped to 77 per cent from 80 per cent in the previous period.
This season’s record earnings as placed Kenya at position one on payment to farmers among the major growing nations, having remunerated the growers an overall average of Sh50 per kilogramme, followed by Sri-Lanka at Sh48 becoming number two globally.
In 2015 ranking, Sri-Lanka was placed on top having paid its farmers Sh49 per kilogramme compared to Kenya’s Sh41 for the same quantity, placing the country at position two.
Sri-Lanka is the world’s leading tea producer with Kenya coming in at number two. However, Kenya is the leading exporter of the commodity in the world. Kenya sells 95 per cent of its tea leaves in the world market.
The KTDA has warned that the outcome for the current financial year is not good due to the low prices that are currently being witnessed at the auction and the prevailing cold season that is to be followed by a dry spell. In last week’s auction, a kilogramme of tea traded at Sh215 compared to Sh286 that it was sold at in the same period last year.
