Multinationals say they have lost Sh300 million following a two-week industrial action that has spooked brokers under the East African Tea Traders Association (EATTA) lobby.
The Kenya Tea Growers Association (KTGA) said the losses arose from overgrown tea that has not been plucked and stalled processing at the factories.
The strike started on October 17 with workers demanding a 30 per cent increase in salaries, which was awarded by the courts in 2014.
However, KTGA successfully appealed the ruling of the Labour Court last year stalling the wage increase through a stay order.
“The operations at the factories have stalled and the loss that we are counting now is estimated at Sh300 million,” said Apollo Kiarii, chief executive KTGA.
Statistics from Tea Directorate indicate tea production from plantations, which mainly comprise multinationals stood at 17 million kilos.
EATTA managing director Edward Mudibo said the ongoing strike is directly hurting the interests of the more than four million Kenyans and those indirectly employed in the tea industry.
“With the current demands, the cost of labour has overtaken inflation and risen to unsustainable level that will likely not guarantee any reasonable returns to sustain the workforce,” said Mr Mudibo.
“Kenya still remains top in the world in terms of cost of labour and production in the tea industry. We risk collapsing the tea industry as was previously witnessed in the South African tea industry.”
He said calculations done by EATTA indicate if the average price of tea was to fall to $ 1.80 (Sh185) based on the prevailing cost of production, most tea producers would have to close down due to unsustainable costs.
The performance of the tea industry is crucial to the Kenyan economy as it is the largest foreign exchange earner, contributing over Sh114 billion in 2013, Sh101 billion in 2014 Sh124 billion in 2015 and Sh120.6 billion in 2016.
Tea farmers affiliated to the Kenya Tea Development Agency are not affected by the strike.