KENYA— The local daily, The Standard, has reported that farmers have used the money they were paid in the form of tea bonuses to repay loans taken for their pluckers’ wages, purchase of farm inputs, and family needs.
Additionally, according to a director at Kericho Gold Tea Company, the low tea bonuses can also be attributed to the dollar exchange rate and nonsubsidized fertilizer.
Furthermore, the director noted that bonuses announced in 2022 and 2023 as ‘good’ payments were all associated with tea reform as the government attempted to take credit for the reforms, although industry players, including the farmers, were aware of the truth.
The tea industry employs more than 10% of Kenya’s population and contributes 23% to forex revenues, playing a vital role in shilling stability.
It also supplements the government’s responsibilities for maintaining roads through cess payments, as well as supporting medical and educational facilities within the plantation sector.
According to the director, the government must ensure the sustainability and posterity of the sector by funding the Tea Research Institute.
This institute develops and disseminates information and technology to farmers, enabling them to boost production without sacrificing quality.
The director also highlighted that overseas purchasers have raised concerns about the diminishing quality of Kenyan tea, leading to certain primary teas selling for less than a dollar.
This trend could potentially result in the closure of tea factories in the long run.
Additionally, the Tea Board requires substantial funding to participate prominently in international beverage trade fairs and explore prospects for joint ventures and bilateral trade agreements, according to the director. This is crucial to safeguard existing markets and increase exports.
On a global level, there is ample funding available for initiatives supporting sustainable agriculture, poverty alleviation, and climate change mitigation. Therefore, the government, through the Tea Board, needs to guide farmers on accessing these funds.
This will ensure that bonuses are not used for projects that could qualify for free funding, such as carbon credits from tree planting projects.
The director pointed out that over 75% of Kenya’s tea is exported to only five countries: Pakistan, Egypt, the UK, Sudan, and Afghanistan. Pakistan alone imports almost 40% of Kenya’s total production.
The director urged for the implementation of the 2007 Tea Industry Task Force report, which recommended diversifying into high-value specialty teas away from the traditional CTC teas that are popular in markets like Russia, UAE, USA, Germany, and Iran.
Moreover, the director noted an increase in taxes for the imported new (virgin) paper used by tea packers.
The initial 25% import duty and 16% VAT have been raised to 35% for import duty, with an additional 25% excise duty and 16% VAT. This makes it harder to add value to tea or even export it.
The director observed that there is a need to explore alternative trading currencies away from the unavailable dollar to facilitate the speed-up of exports and value addition.
