Weak shilling gives farmers Sh37bn tea bonus windfall
A farmer plucking tea. Tea farmers have started receiving a Sh37.1 billion final bonus from the Kenya Tea Development Agency (KTDA) for the financial year to June this year.
What you need to know:
- This is the first time the final payment, which is traditionally paid in October, is being made in July as part of reforms to ensure prompt payments to farmers.
- The payment is an increase from the Sh21 billion bonus paid last year owing to higher global tea prices and a favourable foreign exchange that has seen them earn more shillings for their exports. It marks the best performance of the tea industry in five years.
- The latest payment takes earnings by tea farmers in the year to Sh63 billion, which is a 42.4 per cent increase from the Sh44 billion they pocketed in the same period last year.
Tea farmers have started receiving a Sh37.1 billion final bonus from the Kenya Tea Development Agency (KTDA) for the financial year to June this year.
The payment is an increase from the Sh21 billion bonus paid last year owing to higher global tea prices and a favourable foreign exchange that has seen them earn more shillings for their exports. It marks the best performance of the tea industry in five years.
This is the first time the final payment, which is traditionally paid in October, is being made in July as part of reforms to ensure prompt payments to farmers.
The latest payment takes earnings by tea farmers in the year to Sh63 billion, which is a 42.4 per cent increase from the Sh44 billion they pocketed in the same period last year.
“The performance in the just concluded financial year has been the best farmers have had in a number of years. As we continue to implement reforms, deploy technology and make our processes more efficient across the business, we expect to sustain this growth trajectory and put a smile on our farmers’ faces,” said KTDA chairman David Ichoho.
Farmers earn varying amounts in bonus payments depending on the performance of their individual factories.
The higher earnings were boosted by a weakening Kenya shilling that has made exporters earn more for their products shipped to foreign markets with the local currency trading at 118.09 against the US dollar yesterday compared to 107.93 on a similar date last year.
KTDA said factories in the western region had the highest improvement in payment with an average rate jumping more than 55 per cent.
Sanganyi Tea Factory had the highest increment paying its farmers Sh48 for each kilogramme of green leaf compared to Sh24 last year.
Local value addition
The good fortunes come as President Uhuru Kenyatta last week told KTDA to enhance local value-addition to further boost the earnings of over 650,000 smallholder farmers. Mr Kenyatta spoke on Saturday when he addressed directors of the smallholder tea sub-sector.
Read: Tea bonus farmers’ pain
“The future is value adding 90 per cent of our tea and finding direct markets from the farm to the one consuming the tea in a cup. That will be the long-term solution and it lies with you to set the foundation,” President Kenyatta said.
Tea prices at the Mombasa auction maintained a steady run this week as traders from Egypt, Pakistan, Yemen and the wider Middle East lent strong support.
Market data shows that the price of the commodity hit Sh265 this week up from Sh262 which was realised in the previous sale.
