Tea farmers brace for lowest bonus in 4 years on falling prices
Farmers pick fresh tea leaves at a tea plantation in Kericho. Photo/FILE
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KTDA says increased production in the current season had depressed prices to the extent that the agency is not paying the Sh5 per kilogramme mini-bonus this year.
About 1.1 billion kilogrammes of green leaf was delivered to the 66 KTDA managed tea factories last year compared to 907 million kilogrammes in 2012.
More than 500,000 farmers who sell their tea through the Kenya Tea Development Agency (KTDA) will earn the lowest bonus in four years because of volatile global prices.
The growers were paid a record Sh69 billion for the 2013 crop season (July to June) beating the Sh61 billion that had been paid in each of the previous two years.
KTDA general manager operations Alfred Njagi said increased production in the current season had depressed prices to the extent that the agency is not paying the Sh5 per kilogramme mini-bonus this year. The payment is usually made this month.
“We thought that the quantities that we witnessed last year would come down by the end of the financial year pushing up prices,” said Mr Njagi. “However, we have been witnessing continuous growth in volumes since the year began.”
About 1.1 billion kilogrammes of green leaf was delivered to the 66 KTDA managed tea factories last year compared to 907 million kilogrammes in 2012.
The beverage, a top three foreign exchange earner, traded at $2.0 (Sh170) per kilogramme in last week’s Mombasa auction compared to $2.12 (Sh182) per kilogramme that it attracted the previous week.
For the past 13 sales the average price is $2.3 (Sh199.70) while over the same period last year it was at $2.47 (Sh214.50). The auction is run by the East Africa Tea Traders Association which has nine member countries.
Mr Njagi said that the crop attracted good prices both locally and internationally over the past five years encouraging farmers to tend the pushes in anticipation of higher returns, increasing production.
“The volume per bush increased as farmers practised good husbandry to tap the good prices that tea attracted for the past five years, hence creating a glut in the market,” said Mr Njagi.
The initial payment to farmers of Sh14 per kilogramme of tea harvested in a month has not been affected. However, many farmers use the initial payment to pay for labour and other overheads.
To cushion farmers from losses, Mr Njagi said that KTDA had reduced the price of fertiliser from Sh2,466 per 50-kilogramme bag in 2011 to the current Sh2,200 per bag.
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