The on-going dry spell has complicated matters for multi-national tea companies whose plantations were burnt by the striking workers forcing them to uproot the crop.
The decreased rains due to the biting drought dashed hopes of the crop regenerating, and uprooting is the only recourse.
This comes as the multi-national tea companies are staking on cheaper electricity and steady global prices to reduce operation costs.
Multinational tea companies in Nandi County have incurred losses running into millions of shillings after they were forced to uproot 70 acres of tea set on fire last year by protesting workers in a pay row.
The management of Kapsumbeiwo Tea Factory has begun uprooting crop from two of its plantations that were burnt by the workers after it exhibited no signs of regenerating.
“We have no option but uproot the burnt bushes and plant fresh crop, a process that will take a period of five years before it matures,” said a senior manager who requested not to be named as he is not authorised to speak to the media.
More than 1,000 workers were sacked at Kapsumbeiwo Tea Estate for participating in the strike in December that led to the burning of tea plantations.
“The two tea plantations generate an average of Sh 12.5 million monthly translating to Sh 150 million yearly and it will take four years before the burnt tea bushes regenerate,” said added the official.
The Kenya Plantation and Agricultural Workers Union (KPAWU) moved to court to seek orders restraining Eastern Produce Kenya (EPK) from carrying further disciplinary process aimed at dismissing more workers.
The orders were granted by Justice D.K. Njagi Marete sitting at the Employment and Labour Relations ourt in Kericho pending inter-parties hearing.
But the on-going dry spell has complicated matters for multi-national tea companies whose plantations were burnt by the striking workers forcing them to uproot the crop.
“The decreased rains due to the biting drought dashed hopes of the crop regenerating and uprooting the affected plantation and planting fresh remains the only option despite being costly,” added the official.
This comes as the multi-national tea companies are staking on cheaper electricity and steady global prices to reduce operation costs.
The tea companies including the Kenya Tea Development Authority (KTDA) have expressed fears that the high cost of power was making it difficult for investors in the tea industry to break even and maximize production.
Some of the tea companies have opted to generating own electricity and invest in wood fuel especially the fast maturing eucalyptus trees as a substitute to high cost of electricity to cut down on production costs.
“The high electricity is a major constraint to expansion in the tea industry and the government needs to lower the tariffs for the sector to attract more investors and create employment opportunities,” said David Langat, Chairman Koisagt Tea Company.
Energy costs
He said most tea companies allocate significant amount of the income on energy costs which leads to increased production charges resulting in job cuts to sustain operations.
According to reports by the KTDA-managed tea factories, electricity cost accounts for 30 per cent of the total factory cost of production.
It costs about Sh60 to process a kilogramme of tea with energy cost taking about Sh25.
As part of cost cutting measures, KTDA, through its subsidiary power company KTPC, has invested in hydropower projects to reduce on the high energy cost.
“The ongoing drought is likely to lead to power rationing due to declined water volumes in most rivers and Lakes which will in turn translate to increased operational cost for most tea companies,” said Jackson Kosgei, a tea farmer from Nandi County.
Majority of the tea companies in western Kenya region have invested in private farm forestry for wood fuel to cut down on operational costs.
Farmers who have invested in private farm forestry are earning an average of Sh 150,000 per hectare of well stocked woodlots following increased demand of wood fuel by tea companies.
According to Cabinet Secretary for Industry, Investment and Trade Adan Mohamed, high electricity cost has slowed down the revival and expansion of manufacturing industries in the country.
“The government needs to increase electricity supply at affordable rates to the manufacturing sector to maximise production,” said Mr Mohamed when he toured Eldoret last year.
The global tea prices dropped by about Sh22 per kilo in 2015 but the prices increased in 2016 to about Sh30, translating to gains to investors in the sub-sector.
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