Market News

Factory’s row with KTDA to cut volumes, raise price

Edward Mudibo, East African Tea Trade Association MD. PHOTO | Laban Walloga
Edward Mudibo, East African Tea Trade Association MD. PHOTO | Laban Walloga 

The standoff between a Kericho based factory and the management of Kenya Tea Development Agency (KTDA) is likely to reduce volumes and raise prices if prolonged, key players at the Mombasa tea auction have warned.

East Africa Tea Traders Association (EATTA) managing director Edward Mudibo said the impasse between the KTDA and Toror factory, which is managed by the agency, will affect trading at the auction in coming days if it is not contained in time.

“There is no immediate impact in terms of quantum and price, but if this standoff is prolonged then it will affect volume, price and farmers’ earnings,” said Mr Mudibo.

Tea processing at Toror factory has been paralysed for close to two weeks as 12,000 farmers belonging to the factory fight for separation from Tegat Tea Factory, citing low earnings.

The farmers are said to be delivering green leaf to privately factories.

Toror factory spokesman John Chebochok said the boycott to deliver green leaf to the agency will continue until their demand is met.

However, the KTDA said factories including Toror were fully owned subsidiaries of the parent company and that those seeking to separate must buy out other shareholders.

“In this case, Tegat owns subsidiaries. They belong to all the shareholders of the parent factory,” read the KTDA statement last week.

KTDA represents more than 600,000 small-scale holders who supply the produce to the agency where they earn Sh14 per kilo per month on supplies.

The second payment is made at the end of the financial year and is determined by performance of the commodity at the auction.

Farmers affiliated to KTDA earned Sh78 billion in the last financial year, which was lower than the Sh84 billion realised in the 2015/2016 season.