KTDA pays tea farmers Sh5.5 billion in mini bonus, December deliveries

Women pick tea leaves at a farm. FILE PHOTO | NMG

The Kenya Tea Development Agency (KTDA) has disbursed Sh5.5 billion for December green leaf deliveries and bonuses, as the agency moves to keep its promise of prompt payments to farmers.

The payment includes Sh2.7 billion in mini-bonuses from factories whose directors passed resolutions to pay.

The agency will also use the remaining Sh2.8 billion to pay farmers for the December green leaf delivered to factories.

The payment, set to hit farmers accounts in the next few days, will see them earn between Sh5 and Sh10 as mini bonus per kilo of green leaf delivered to their factories for the six months up to December 31.

“We are pleased to announce that the payment for the December 2022 green leaf delivery by our farmers has been made this week, together with the mini bonus for the period July to December, 2022. Farmers have been waiting for this payment and we have made it right before schools open, to enable our farmers meet their back to school obligations alongside other personal obligations,” KTDA chairman David Ichoho said on Thursday.

“As part of the reforms, we promised our farmers that they will receive their pay by 5th of the month, a promise we have dutifully kept. We have delayed slightly this month to enable us compute the proper amounts to pay to farmers.”

Mr Ichoho said the Sh2.7 billion mini bonus payment represents 449 million kilos of green leaf delivered to KTDA-managed factories over the six-month period.

During the same period, average tea prices for KTDA at the auction stood at Sh326 per kilogramme of made tea compared to Sh306 over the same period in the 2020/2021 financial year.

Funds to cater for these payments have been generated through the sale of tea over the period under consideration.

The payment will see farmers in factories in Zones 1 – 9 which includes Kambaa, Ngere and Githambo receive the mini bonuses, while those in Zones 10 to 12 (Tombe, Kebirigo, Kiamokama, Nyamache, Ogembo) traditionally holding off from paying, instead making a singular payment as part of the final payment (bonus) later in the year.

KTDA operates a two-step payment model where farmers are paid monthly, and an additional interim payment (mini bonus) and a final payment (bonus) based on the performance of each factory.

This model allows farmers to spread their earning through the year to cater for their needs.

Early payment of farmers’ dues is part of reforms being instituted by the KTDA Holdings Board, the introduction of the reserve price for teas from KTDA-managed factories of $2.43 per kilo of made tea.

The Sh2.7 billion early bonus payment is coming at a time Ministry of Agriculture is probing the circumstances under which KTDA mortgaged its shares to the tune of Sh18.2 billion to pay an early bonus to farmers ahead of the polls.

The loan was guaranteed by the KTDA Management Service, which is a subsidiary of KTDA Holdings.

KTDA normally closes its books on June 30 with the bonus payment to farmers approved in September ahead of disbursement in October.

The 2021/2022 bonus was, however, paid at the beginning of July.

On Thursday, Agriculture Cabinet Secretary Mithika Linturi told Business Daily that investigations into the matter are yet to be concluded.

“Let’s wait, I will call you for a press conference on the matter once investigations are over,” said Mr Linturi.

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