Tea farmers are set to receive 28 billion shillings as bonus payments from 54 tea Factory companies managed by the Kenya Tea Development Agency for the year ending June 30.
However, this is lower compared to last year’s payment of Ksh 28.8 billion attributed to excess global supplies.
This year’s total payment represents an 11.6 percent increase from last year and means that, on average, farmers will take home more earnings than they did last year.
The growth is attributed to an increased green leaf production by the factories, which grew by 29 percent for the year to stand at 1.45 billion kgs compared to 1.13 billion kgs over a similar period last year, as well as a more favorable exchange rate.
This is despite the average price for a kilo of sold tea falling by 8.1 percent to an average twelve-year low of 250 shillings per kilo compared to 265 shillings per kilo in 2019.
The volume of processed tea produced by the 54 factories increased to 326 million kilograms (kgs) for the year, up from 267 million kgs last year.
On average, 4.5kgs of the green leaf make one kilogramme of processed tea.
Consequently, turnover for the 54 Tea Factory Companies grew by 14 percent to stand KShs 79 billion compared to KShs 69 billion in 2019.
In determining the bonus, individual factory companies consider the revenue generated from tea sales, dividends from KTDA holdings, and interests earned from deposits less costs of operations which include government taxes.
This year’s total payment to farmers amounts to 66 percent of total revenue by the factories.
“The 54 Tea Factory Companies, which own the 69 tea factories that are managed by KTDA-MS, have this week released the final payment for the year ended June 30, 2020, to the over 600,000 smallholder tea farmers under KTDA.
“These results were achieved amidst disruptions in the global tea market occasioned by the COVID-19 pandemic,” KTDA-MS Managing Director, Alfred Njagi said.