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Tea farmers rake in record Sh64bn

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Farmers picking tea. FILE PHOTO | NMG

Tea farmers have earned a record gross payment of Sh85.74 billion 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 are up 9.4 per cent compared to last season’s total income of Sh78.31 billion, according to the Kenya Tea Development Agency (KTDA).

A kilogramme of green leaf fetched an average of Sh52.51 in the last season, having dropped from Sh58.61 in 2017. KTDA linked the drop in price per kilo to “escalating costs of production and depressed prices” during the last quarter of the financial year.

KTDA said the higher output means tea farmers took home Sh62.35 billion after expenses in the current year, 8.6 per cent higher than the Sh57.44 billion paid out in the year to June 2017, translating to better average returns for the over 600,000 farmers.

The farmers have already earned Sh18.03 billion in initial monthly payments and will receive the Sh44.33 billion second payment later this month.

The payout represents a return of 73 per cent of the total tea revenue, the remaining 27 per cent having gone to “covering various costs of production,” KTDA said.

KTDA chief executive Lerionka Tiampati said the increased earnings were due to high volumes of green leaf output resulting from improved rainfall and stable tea prices.

Green tea leaf production rose 21 per cent in the period under review on improved rainfall compared to the dry conditions in the previous year.

KTDA-managed tea factories received a cumulative 1.18 billion kilogrammes of green leaf up from 976.78 million in the same period last year.

Farmers earn Sh15 per kilo of green leaf delivered per month, while the rest is paid as second payment at the end of the financial year.

KTDA-managed factories, the agency noted, faced a number of challenges such as high cost of energy and labour, among others. “The factories are also grappling with other challenges like tea hawking that has led to a reduction in the amount of green leaf available to some factories, thereby affecting their operating capacity, and the quality of leaf available for processing,” it said.

To deal with rising costs of production, KTDA said, factories are investing in small hydropower stations (SHPs) to deliver affordable power to factories.

The list of SHPs that have been completed and are generating electricity includes Imenti, Gura and Chania.

Factories have also established wood plantations that are expected to be a long-term source of wood fuel for their operations. Besides, as part of the diversification efforts, a number of factories have ventured into orthodox tea production to reduce reliance on black CTC tea.

Kenya is the leading exporter of black CTC teas in the world accounting for about 23 per cent of the global exports.

Out of this, KTDA accounts for about 13 per cent of the global tea exports. The agency exports the bulk of its teas to Pakistan, UK, Egypt, Afghanistan, Iran, Sudan, Yemen and UAE, among other countries. Currently, the agency is developing new markets such as Russia, Kazakhstan, US and Poland.