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Economy

KTDA links low bonus to weak currencies, politics

Tea
Pakistan, a key market for Kenyan tea accounting for up to 38 percent of the total exports, faces the threat of nuclear conflict with India. FILE PHOTO | NMG 

The Kenya Tea Development Agency (KTDA) says political turmoil of black CTC (cut, tear, curl) markets such as Pakistan, Egypt, the UK and the United Arabs Emirates and Sudan have significantly undermined its ability to pay farmers.

The instability has weakened both the currencies and purchasing power in Kenya’s tea markets, translating to lower export earnings, the agency said in the wake of a court order inviting Auditor-General to scrutinise its operations.

Pakistan, a key market for Kenyan tea accounting for up to 38 percent of the total exports, faces the threat of nuclear conflict with India.

Egypt is grappling with high inflation and currency devaluations while the UK’s sterling pound has weakened in recent months as Brexit uncertainty hangs in the horizon.

Sudan, another key market, has lately faced political upheavals, coupled with the loss of oil revenue to South Sudan.

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The KTDA, which is under sharp criticism over reduced tea earnings, also cited economic sanctions by the US on Iran as a major blow to the key market of Kenyan tea.

At home, the agency says the high cost of production, glut and low quality have contributed to the lower earnings from the 2018/19 crop.

The KTDA paid farmers Sh46.45 billion compared to Sh62.35 billion the previous year.

Board members Francis Macharia and Erastus Gakuya urged politicians to keep off tea sector, saying continued politicisation would scare away the buyers and kill the tea industry.

“Tea is food and it is a sensitive sector, the international market is listening to what is going on in our country and continued politicisation of tea sector will scare away the buyers causing a drop in the market and eventually kill the sector,”

Mr Macharia urged leaders seeking answers to visit them at their offices to get the full details on their operations.

KTDA National Chairman Peter Kanyago underscored the need to seek strategies to improve the industry.

“We are not afraid because KTDA is an efficiently run organisation owned by the farmers … our books and audits are open for scrutiny,” he said.

To improve on the prices of the beverage, Mr Kanyago said, value-addition of teas through a partnership with the government and traders.

“We would like to call on the government to partner with traders in value-addition of tea as well as remove the 16 per cent tax on the value-added commodity,” he said.

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