Multinational and small-scale tea farmers in Nandi County have incurred losses running into millions of shillings due to a surplus crop that has affected the processing capacity of most factories.
Majority of the factories are receiving double their processing volume resulting in the crop going to waste.
“We are receiving an average of 400,000 kilogrammes against processing capability of 270,000 kilogrammes, resulting in more than 30 per cent of the crop going to waste,” said Wilson Tuwei, chairman of a tea farmers' group at Siret Tea Company.
The increase in crop production has been attributed to the recent heavy rains in the region.
The tea farmers have, however, initiated a programme to set up Sh500-million factory to tackle congestion in the existing firms.
“We have mobilised resources to construct a new tea factory to cushion farmers from losses due to waste caused by lack of market for the crop,” disclosed Mr Tuwei.
The county is currently home to 19 tea factories with multinational firms taking the lion’s share of 16.
The Kenya Tea Development Authority KTDA has two factories, Chebut Tea Factory in Kapsabet town and Kaptumo in Aldai Sub-County.
The government-owned Nyayo Tea Zones Development Authority owns the Kipchabo Tea Factory.
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 KTDA, have expressed concern over the high cost of power that makes it difficult for investors to break even and maximise production.
Some of the tea companies have opted to generating own electricity or invest in wood fuel especially the fast-maturing eucalyptus trees as a substitute.
“The high electricity cost 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, the chairman of Koisagt Tea Company.
He said most tea companies allocate a big part of their income on energy costs, with the high production charges resulting in job cuts to sustain operations.
According to reports by KTDA, 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.