Tea farmers to get mini bonus by month-end

Nairobi, Kenya: Tea farmers can now rest easy following an announcement that they will be paid an interim bonus – commonly known as mini bonus – at the end of this month.

The Kenya Tea Development Agency (KTDA) announced this on Wednesday in a meeting of tea sector stakeholders chaired by President Uhuru Kenyatta at State House, Nairobi. The agency said the tea factories’ boards would agree on the rate per kilo.

President Kenyatta impressed on the Ministry of Agriculture, KTDA and other players in the tea sector to cushion farmers from unnecessary taxes and levies to lower the cost of production and increase returns.

“Tea is one of our chief foreign exchange earners and we have to ensure that our farmers are comfortable and continue producing,” President Kenyatta said.

The President directed the National Treasury to meet and look at taxes such as Value Added Tax (VAT) and import duties that hinder growth of the tea industry.

The meeting proposed the setting up of a price stabilisation fund through partnership between the Government and the tea industry.

As a move to ensure tea farmers reap maximum benefits, the President said regulatory framework at the Mombasa tea auction should be improved to ensure transparency.

He said that implementation of the proposed electronic tea auction through public private partnership (PPP) should be fast-tracked.

President Kenyatta also asked KTDA to boost capacity during glut. During the meeting, Agriculture Cabinet Secretary Felix Koskei made a presentation on measures to address declining tea prices.

User facility

On low level of value addition, Koskei said implementation of the Common User Facility (CUF) – estimated at Sh3.6 billion – should start to provide incentives for investors under the public private partnership model.

Currently, the tea industry is experiencing low levels of value addition at less than 10 per cent due to inadequate facilitation and access to technology by SMEs, Mr Koskei said. “Kenya tea fetches lower prices compared to value added teas,” he added.

On low excise duty charged on tea imports, Mr Koskei said it should be raised from 25 per cent to 100 per cent as charged by other tea producing countries outside the common markets to inhibit excess importation of value added tea.

 KTDA Chairman Peter Kanyago expressed concern over tea hawking, saying it contributed to quality reduction.