Kenyan tea farmers face sour times as bonus drops by 44pc

NAIROBI, KENYA: Farmers affiliated to the Kenya Tea Development Agency (KTDA) should expect to earn less from their produce compared to last year following low prices of the crop.

According to the KTDA top management, average earnings decreased by 44.3 per cent in the 2013/14 financial year. Farmers will earn Sh17.61 per kilogramme of green leaf as final payment (bonus), compared to Sh31.65 per kilogramme of green leaf realised last year.

Chief Executive Officer Lerionka Tiampati said the drop in earnings from the 2012/2013 financial year is attributable to oversupply of tea in the market, which led to fluctuating global tea prices.

He explained that the oversupply led to a decline in prices at the Mombasa auction from Sh286.88 ($3.26) in 2013 to Sh13.8 ($2.43), representing a 22 per cent drop. Farmers will start receiving the bonus at the end of October this year.

"Although farmers' earnings were lower than the previous year, tea volumes sold were good and majority of farmers would still meet their costs of production and make some profit," Mr Tiampati said while announcing the bonus payment at a Nairobi Hotel Wednesday.

The final payment to the farmers also decreased from Sh35.6 billion in 2013 to Sh19.8 billion during the review period ended June 2014. Tiampati explained that gross earnings decreased to Sh52.6 billion in 2014 compared to Sh69.2 billion recorded in 2013.

The gross earnings in 2013 increased by 13.1 per cent, reaching Sh69 billion compared to Sh61 billion registered in 2012/13 production year.

Tiampati said between 2010 and 2013 production years, tea prices were at around Sh264 ($3), thus prompting farmers to plant more bushes. However, the trend changed this year as the price dropped to Sh213.8 ($2.43) at the Mombasa tea auction, representing a 22 per cent drop. He said the agency had taken steps to communicate with farmers affiliated to it on the impact of low prices on their earnings.