Decade of tea sector reforms leaves farmers with bitter taste

When the Tea Act 2020 was signed into law in December 2020, it was against expectations that it would usher in a new era for the sector. One where the farmer, who had for years ended up with the short end of the stick, was firmly in control of their produce.

The Act, which had been in the making for years, sought to give farmers greater control over the management of their factories, ensure faster payment of tea sale proceeds and more predictable payments for green leaf. The new law, which reversed the consolidation of the tea sector and other agricultural subsectors under the Crops Act and restored it as a standalone sector, was also expected to strengthen regulation across the value chain.

Six years on, and despite a series of other initiatives, including the push led by the former Deputy President Rigathi Gachagua and an attempt to amend the 2020 Act to smooth the process of empowering the farmer, the tea industry appears hell-bent on resisting change and turning the tide in favour of the farmer. Seemingly invincible forces driving institutional resistance and legal bottlenecks have left the farmer in the same position, if not worse off.

This is the sentiment that has been heard throughout last week across tea-producing regions, where farmers argued that the tea bushes they tend to throughout the year could not match the earnings from the few and far-between avocado trees or even dairy cows, which were initially meant to complement tea farming but had increasingly become a more reliable source of income.

“We are better off with dairy cows... there is more sense in uprooting the tea bushes and instead planting napier grass,” said one farmer from Murang’a County speaking to KTN, reflecting on the bonus payment for the 2025/26 period that took place last week.

The total payout allocated to KTDA smallholder farmers – which combines the initial payment on delivery of tea to factors and the second (bonus) payment – fell from a historic high of Sh89.6 billion in 2023 to Sh69.8 billion in 2024/25. The decline was by a significant Sh19.8 billion, which is driving many to view the reforms as largely having failed.  KTDA has not disclosed how much was paid this year.

Among the factors cited as having caused the decline are the controversial 0.8 per cent tea export levy that was effected this year and is said to have eroded auction premiums, as well as global shipping bottlenecks that increased logistical and storage costs. The closure of critical shipping routes, including the Strait of Hormuz, which has shut out Kenyan tea from direct access to key markets such as Iran, has also been cited as a factor. Additionally, a strengthening Kenya shilling reduced the local-currency value of dollar-denominated export auction sales that forced factories to declare significantly lower second payments to small-scale growers nationwide.

While the regulation and global factors have been at play and blamed for lower farmer earnings, there have always been concerns of cartel-like activities within the tea sector that have ensured that things would remain the same for farmers.

Gachagua, who had been mandated to lead reforms in the tea sector with the ultimate aim of addressing low returns to smallholder farmers when he served as President Ruto’s DP, repeatedly spoke of the invincible forces that frustrated reform efforts. In February 2024, the former DP said powerful middlemen and profiteers were fighting efforts to increase earnings for smallholder farmers by frustrating the reform process.

The reforms also appear not to have yielded equity, as tea farmers questioned disparities in annual bonus payments across different zones.

In Murang’a, for instance, farmers questioned why those in one factory received Sh30 per kilogramme while their counterparts in a neighbouring factory were paid Sh49 per kilogramme.

“We are asking the governor to form a task force to look into the matter. How is it that a farmer delivering tea to one factory is paid Sh30 in Githambo while another is paid Sh49 per kilo for tea delivered in Gacharage? What is the issue? We cannot trust KTDA anymore,” said another farmer.

The disparity in bonus payments is, however, more pronounced among tea producers east of the Rift Valley. Farmers in counties such as Nandi, Kericho, Bomet and Nakuru were paid between Sh12.50 and Sh22 per kilogramme in bonuses.

The bonus, combined with the initial payment of Sh26 per kilogramme, for some factories, brings the total payment to about Sh45 per kilogramme, which farmers say does not tally with the Sh56 per kilogramme that the government says farmers have been receiving. The pay is also in comparison to the total payout by some factories in Mount Kenya, which is in the region of Sh80 per kilogramme.

The disparities have seen small-scale tea farmers from Nyamira and Kisii seek the green light from the High Court to initiate judicial review proceedings over bonus payments for the 2025/26 financial year. The farmers cited the huge differences between their earnings and those of their counterparts in other regions.

Other farmers in counties west of the Rift Valley, including Nandi and Kericho, have also sought explanations. Kaptumo-Chebut Tea Factory in Nandi County, for instance, threatened to boycott green-leaf deliveries if it was not given an explanation.

“The bonus we have received this year has nothing good to write home about,” said Richard Rono, a farmer from Nandi County, who noted that once costs such as fertiliser taken on credit and loan repayments were factored in, many farmers would go home empty-handed.

“The money we have received is not something that can help us in any way. We have fertiliser that we took on credit... we have borrowed loans from financial institutions including subsidiaries of KTDA,” he said, wondering how farmers would service the debt obligations and meet obligations at home, including running their farms and meeting basic needs at home.

The sentiments expressed by farmers are worlds apart from the government's position on tea sector reforms and their impact on farmers' welfare.

President Ruto, speaking at a recent food systems summit in Nairobi, said the reforms had resulted in higher payments, with farmers now earning an average of Sh56 per kilogramme of tea, compared with Sh34 three years earlier.

“Three years ago, the average price of green leaf was Sh35, the average price today is Sh56 per kilogramme,” said President Ruto.

However, while top factories in the Mount Kenya region paid a total of between Sh70 and Sh80 per kilogramme, factories west of the Rift Valley paid between Sh35 and Sh45 per kilogramme.

Producers in the western region account for the bulk of tea produced by smallholder farmers, supplying 70 per cent of the total green-leaf quantities delivered to KTDA factories countrywide.

This has meant that President Ruto's argument that farmers are earning upwards of Sh56 per kilogramme has not resonated with many tea farmers.

KTDA attributed the differences in payments to several factors, including tea quality and factory management practices, arguing that efficiently managed factories are better positioned to pay farmers more.

“Teas from different factories fetch varying prices at the markets—either through the auction or direct sales. This difference is driven by consumer preference, with buyers willing to pay a higher price for teas from some factories due to factors such as type of soil, altitude, climate and rainfall quantity,” KTDA said in a past statement explaining the disparities.

“The buyers are willing to pay a premium on the teas from these factories (regions); hence, the farmers in these areas will often receive better returns for their produce compared to others.”

It is not the first time that the disparity in pay between farmers in the West of the Rift Valley and those in the East region has come up. Last year, the National Assembly's Departmental Committee on Agriculture and Livestock undertook an inquiry into the practice and found that tea farmers west of the Rift Valley received lower prices partly because their tea fetched less at auction.

The MPs also noted that production costs were 31 per cent higher due to significantly higher transport, labour and energy. The Committee also noted that the factories had governance problems including excessive board meetings, lack of transparency in inter-factory lending and alleged manipulation of weighing scales, all of which eroded farmer earnings.

According to the Committee’s report, in the 2024/25 financial year, tea from the eastern region fetched an average $2.95 per kilo at the auction compared to $1.78 for tea from the west.

The findings were presented by committee chair John Mutunga in Parliament in April this year.

Beyond differences in auction prices and factory operating costs, questions have also emerged over how some factories finance their operations and farmers’ payments, with heavy factories said to be unnecessarily heavily indebted, with loans acquired without ideal levels of transparency.

A March 2026 audit report attributed to the Tea Board of Kenya raised concerns over KTDA-managed factories’ borrowing, citing Sh34.05 billion in outstanding loans across 69 factories as at December 2025 and an unexplained Sh5.18 billion difference between loans arranged and calculated financing needs. It also alleged that some factories overvalued unsold tea stocks used to secure loans, potentially leaving them with debt to repay from future earnings.

KTDA disputed the legitimacy of the audit and rejected claims that factories borrowed specifically to pay farmers’ bonuses. In an August 2026 statement, the agency said the loans also financed working capital, operations and investments, while weak auction prices and slow sales created cash-flow pressures for some factories.

Kenya's tea sector is critical to the economy, contributing about two per cent of gross domestic product (GDP) and accounting for about 23 per cent of total export earnings.

The sector supports the livelihoods of around 6.5 million people, both directly and indirectly. The country produced 550.4 million kilogrammes of tea in 2025, generating Sh187 billion in earnings last year.

Despite this significant economic contribution, farmers continue to face diminishing returns, largely due to rising production, processing and marketing costs, according to a different report by the National Assembly’s Committee on Agriculture.

“These challenges have eroded farmers' income and reduced the sector's net contribution to national economic benefits, including foreign exchange earnings,” a parliamentary committee said in a report on the Tea Amendment Bill 2023, which is still under consideration by the National Assembly.

The Bill sought to introduce targeted changes to the Tea Act 2020 and included resolving disputes between the Tea Board of Kenya (TBK), the Kenya Tea Growers Association (KTGA) and the East African Tea Trade Association (EATTA) over some of the provisions of the Tea Act 2020. The two entities had agreed to withdraw cases in court challenging implementation of the Tea Act as the government agreed to amend the Act and address their concerns.

The Amendment Bill sought to open up tea sales by allowing farmers, through their factories, to undertake direct sales as well as improve transparency and ensure fast payment of money to farmers. The bill also seeks to safeguard tea revenues from mismanagement and promote value addition and diversification within the sector.

However, the Bill also had downsides, according to the parliamentary committee, which noted that it proposed increasing management agency fees from 1.5 per cent to two per cent of net sales, a move that would further burden farmers.

The Bill also proposes the elimination of Tea Levy allocations for price stabilisation and infrastructure in the sector, instead reallocating the funds to the Tea Board of Kenya, which would receive 60 per cent, and the Tea Research Foundation, which would receive 40 per cent.

The committee further noted that the Bill failed to establish the long-awaited Tea Revolving Fund, similar to the Coffee Cherry Advance Revolving Fund, which could offer affordable financing to farmers.

Stakeholders also criticised the Bill for failing to address other issues considered critical to the sector, according to the Committee, including excessive taxation by national and county governments, unfair trade practices under the KTDA structure, high broker fees and governance challenges across factories.

While Kenya is the world's third-largest tea producer after China and India, accounting for 8.3 per cent of global production, and its tea remains globally recognised for its quality and flavour, it has perennially left a bitter taste among farmers who, despite being core to the sector, remain relegated to the margins.