Kenya Tea Development Agency is meeting to determine the second payment for small scale farmers even as the pay is forecasted to decline following a 21 percent drop in the value of the beverage.
Directors from 69 KTDA-managed factories have begun meetings to review and approve the factories’ annual accounts for the 2018-19 financial year ahead of the declaration.
Tea prices at the Mombasa auction have been falling since the beginning of the year, pushing down the average price per kilo to Sh214 this year from Sh271 last year.
“The meetings to determine the second payments begun on September 9 and will be followed by a formal declaration of the second payments once the process is complete,” said KTDA in a statement.
Small scale tea holders earned a record gross payment of Sh85.74 billion last year, riding on a bumper harvest in the past season that defied the fall in global market prices, marking the third year of improved earnings.
At Sh85.74 billion, Kenya’s tea earnings were up 9.4 per cent compared to the previous season’s total income of Sh78.31 billion, according to the agency.
High inflation and depreciation of up to 50 percent of the Pakistani currency has been a major contributor to the falling prices.
Pakistan is a key market for Kenyan tea, accounting for up to 38 percent of the total exports. Other key export destinations such as Egypt have seen high inflation and currency devaluations making import of the commodity expensive.
Sudan, which is another key market has lately faced political upheavals, coupled with the loss of oil revenue to South Sudan.
KTDA had earlier this year warned farmers of reduced earnings in the second payment of 2019 resulting from low auction prices. Tea farmers normally receive half of their pay in monthly payments, with remaining half distributed at the end of the financial year as the final payment.
Globally, tea prices at the other two key auction centres of Colombo in Sri Lanka and Kolkata in India have likewise declined. Colombo prices for orthodox teas have declined from $3.99 to $3.26 a kilo, a drop of 22 percent.
Prices for Kolkata CTC teas have declined by 12 percent from $2.46 to $2.17, a kilo.
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