Tea farmers take Sh16 billion cut in KTDA bonus pay

KENYA – Kenya Tea Development Agency (KTDA) announced Wednesday that more than 600,000 small-scale holders affiliated to the marketing agency would be paid a total bonus of Sh19.8 billion, a 44.3 per cent drop on the Sh35.6 billion paid last year.

KENYA – Kenya Tea Development Agency (KTDA) announced Wednesday that more than 600,000 small-scale holders affiliated to the marketing agency would be paid a total bonus of Sh19.8 billion, a 44.3 per cent drop on the Sh35.6 billion paid last year.

The total earnings for KTDA decreased from Sh69.2 billion last year to Sh52.9 billion in the year under review, representing a 23 per cent decline.

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Tea exports from Kenya increased in 2013/2014 to 497 million kilogrammes compared to 467 million kilogrammes in the previous year.

Tea farmers are set to take a Sh15.8 billion cut in bonus earnings this year as a sharp drop in international prices reduced their pay to a six-year low.

Kenya Tea Development Agency (KTDA) announced Wednesday that more than 600,000 small-scale holders affiliated to the marketing agency would be paid a total bonus of Sh19.8 billion, a 44.3 per cent drop on the Sh35.6 billion paid last year.

The total earnings for KTDA decreased from Sh69.2 billion last year to Sh52.9 billion in the year under review, representing a 23 per cent decline.

“The favourable weather conditions experienced in 2013 through to 2014 led to an oversupply of tea triggering a significant reduction in prices,” said KTDA chief executive Lerionka Tiampati.

The announcement came at a time when the price of made tea at the Mombasa auction continues to register dismal performance, having hit a six-year low of Sh174 ($2) in last week’s auction.

Farmers have so far received initial payments of Sh15.74 billion through the preliminary disbursements of Sh14 per kilo every month and the remainder, popularly referred to as the bonus, will be released in October.

Announcing the KTDA results at a Nairobi Hotel, Mr Tiampati said the drop in earnings from the 2012-2013 financial year, was as a result of over-supply of tea in the market, leading to fluctuating global prices.

According to Mr Tiampati, tea growing areas experienced favourable weather conditions leading to a bumper crop in the year ending June 2014 where over 1.1 billion kilogrammes of green leaf was produced during this period, translating to 256 million kilogrammes of made tea.

Mr Tiampati noted that the outlook for the industry was unlikely to change in the wake of increased production, noting that the prices would likely remain the same.

He also attributed the drop in earnings on political instability in key markets such as Egypt and Sudan. He, however, pointed out that the volumes are now growing as the situation stabilises.

KTDA chairman Peter Kanyago said they were exploring new markets as they target new buyers for the country’s tea.

“We want to expand our markets beyond the traditional buyers and we have started with Malaysia who have already embraced our tea,” said Mr Kanyago.

Although farmers’ earnings were lower than the previous year, the CEO said tea volumes sold were good and majority of farmers would still meet their costs of production and make some profit.

He said the agency had taken steps to communicate with farmers affiliated to it regarding the impact of low prices on their earnings, noting that farmers were aware that their earnings would be lower this year.

September 18, 2014; http://www.businessdailyafrica.com/Tea-farmers-take-Sh16bn-cut-in-KTDA-bonus-pay/-/539552/2455824/-/lagotw/-/index.html

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