Private tea firms eat into KTDA market share

Silas Njibwakale, the managing director of Kipkebe Tea Company, a subsidiary of agricultural firm Sasini, at of the company’s tea estates in Kisii County. [Stanley Ongwae, Standard]

The Kenya Tea Development Authority (KTDA) is facing rising competition from private tea companies for green leaf from its contracted farmers.

One such company is Kipkebe Tea Company, a subsidiary of Nairobi Securities Exchange-listed agricultural firm Sasini, which outsourced close to 30 million kilos of green tea from local farmers last year.

This helped improve its output and, in turn, recover from a Sh337 million loss it had registered the previous year.

Kipkebe Tea Company Managing Director Silas Njibwakaele said the firm offers better prices than those offered by the State-owned tea agency.  

“The year ended 2020 was the best for farmers because they were paid better than ever before. This has drawn so many of them to our company,” said Mr Njibwakale.

The multinational franchise offered farmers Sh28 per kilo of green leaf delivered, while the highest-paid KTDA-affiliated farmers got Sh26 per kilo.

Jane Nyarinda, a farmer at Matutu, said she has no regrets for making the switch to the private firm.

“We are in business. We go where we can get good returns,” said Ms Nyarinda.

She earned about Sh50,000 in tea bonus payout from Sasini for the 1,300 kilos of green leaf she delivered to the firm last year.

Sasini has started paying out dividends to its shareholders after recovering from a three-year losing streak.

It paid an interim dividend of Sh0.50 per share for the year ended September 30, 2020, after registering a pre-tax profit of Sh192 million.

Nelson Onduko, a director of Kebirigo Tea Factory, said farmers are disenfranchised by how KTDA is run, which is why they are turning to private firms.

“Yes, farmers were demoralised by how their factories are being managed. But with the new reforms, we hope they will revert to selling tea to KTDA factories,” said Onduko.