KENYA-The Kenya Tea Development Agency Holdings Limited (KTDA) has announced that it will be paying a KES 44.15 billion (US$297.91 million) bonus to its 600, 000 smallholder tea farmers in 54 factories in October.
This bonus payout to be paid alongside the green leaf supplies for September, will cater for the green leaf supplies for the financial year ending June 30.
The bonus payout is expected to lift farmers’ total earnings for the year by 7.6 percent to an all-time high of KES67.7 billion (US$456.82 million) from KES62.89 billion (US$424.36 million) at the same time last year.
The increase in bonus payout is credited to improved tea prices in the internal market and increased sales of the orthodox team during the year.
“This year’s total payout to smallholder farmers is attributed to increased sales volume, prudent cost management, and a favorable foreign exchange regime,” said KTDA Holdings Limited Group Head of Corporate Affairs Ndiga Kithae.
Mr. Kithae further notes that the introduction of a minimum tea price following ongoing reforms in the sector and a weaker shilling has further boosted farmers’ bonus payout.
Despite the increased bonus payout, the company noted that its green leaf production has reduced to 1.145 billion kilograms from the initial 1.254 billion kilograms in 2022, marking the lowest output for the sector since 2019.
The company clarified that the lower tea production was partly caused by drought conditions and depressed rainfall which decimated farm output accounting for a 1.6 percent contraction of the agriculture sector in 2022.
Additional reports by the Kenya National Bureau of Statistics indicate that drought conditions dimmed tea production to 535,000 tonnes from 537,800 tonnes in 2022.
The company also reported a 15.2 percent decline in leaf production in Kiambu’s Kambaa, Kagwe, Gacharage, and Nduti factories.
Other areas affected were the Kericho-Bomet regions and Kisii-Nyamira regions where production dwindled by 14.3 percent and 8.5 percent respectively.
With the new bonus payout, farmers in the Kericho-Bomet region will earn a total of KES 16.1 billion (US$108.64 million) for 305.4 million kilograms of tea supplied during the year.
Kapkoros, Tirgaga, Olenguruone, and Motigo factory farmers will split KES 4.9 billion (US$33.06), which will be the highest-ever bonus payout for the sub-region.
Farmers from the Kiambu region will earn KES 12.8 billion (US$86.37 million), and those in the Kirinyaga-Embu region will earn KES 10.4 billion (US$70.18 million).
Other regional bonus payouts are Meru region (Sh9.6 billion; US$64.78 million), Murang’a-Nyeri region (KES8.9 billion; US$60.05 million), Kisii-Nyamira region (KES 7.5 billion; US$50.61 million) and Vihiga-Kakamega-Nandi (KES2 billion; US$1.35 million).