Tea bonus payout drops on account of a strong shilling and high stocks
Tea farmers under the Kenya Tea Development Agency (KTDA) are bracing for a reduced bonus payout that will be released next week on account of a stronger shilling.
Tea factories under KTDA are set to release the payment to farmers next week with a warning that the bonus has dropped slightly compared to last year that saw a record increase.
This was revealed by KTDA national chairman Chege Kirundi while receiving a cheque of Sh 2.65 billion from President Ruto at State House Nairobi.
These were deposits held by the Kenya Deposit Insurance Company under the defunct Chase and Imperial Banks that went down with tea farmers’ deposits in 2016.
On a positive note, Kirundi said government intervention key among them supply of subsidized fertilizer cushioned farmers from receiving a big hit. Thanks to the subsidy program, the cost of fertilizer to farmers dropped from a high of Sh 3,400/- to Sh 2,500/-
Kirundi note that compared to last year, the shilling was exchanging at Ksh 144.21 to the US$ while this year it is exchanging at a low of Ksh 129.37 to the US$.
“Compared to the year 2023/24, current performance has been hampered by exterior factors. Production has dropped by 12% on account of un-favourable weather conditions while sales volumes increased by 8% driven by high stocks that were brought forward,’’ said Kirundi.
He said the high volumes of tea available in the market caused a reduction in price from Ksh 389.60 to Ksh 309.21 difference of Ksh 80.47, while, the changes in exchange rate for USD dropped to Ksh 129.37 compared to Ksh144.21 in the previous year and negatively impacted sales revenues.
He said those factors are the main causes for the apparent drop in the earnings by tea farmers this year including geopolitics and currency devaluation in some markets have also contributed to the decline in earnings.
Kirundi said KTDA holdings and its subsidiaries are continuously looking for new ways to earn revenues for tea farmers and Government support is required in such areas as;
a) Intensifying market development initiatives. We plan to host a KTDA teas International Conference later in the next year and appeal for partnership with government agencies especially those in the tourism sector.
b) development of a forex adjustment support program
c) Allocation of land within Dongo Kundu SEZ for warehousing and tea packaging.
d) Concessions for Tea Factories to manage public forests in their areas for both conservation and fuel wood.
He said the tea sector faces many challenges that often lead to disruptions of farmers’ incomes but KTDA and all stakeholders will keep striving to make the industry more sustainable and responsive to the needs of both producers and consumers.
