How tea factories in various regions will share bonus cash

Monday September 15 2014

A tea auction in Mombasa on September 9, 2014. Factories that are regarded as satellites of older ones lack direct access to the auction. FILE PHOTO | KEVIN ODIT |

A tea auction in Mombasa on September 9, 2014. Factories that are regarded as satellites of older ones lack direct access to the auction. FILE PHOTO | KEVIN ODIT | NATION MEDIA GROUP

Small-scale tea farmers will earn as low as Sh8 per kilogramme in this year’s annual bonus payout, making it one of the darkest seasons in the sector’s history.

Numbers seen by the Nation show that Ogembo Tea Factory will pay its farmers Sh8.50 per kilogramme of tea delivered, making it the lowest payer of the 54 affiliated factory companies managed by KTDA.

The amount is significantly lower than the rate of Sh23.50 per kilogramme it paid previously.

Bonus payments are determined by factory directors for each of the 54 companies.

The bonus, the worst in six years, adds to the farmers’ disillusionment after they already missed on the half-year pay.

LOW GLOBAL TEA PRICES

The industry has been hit by low international tea prices triggered by a market glut.

A study conducted by the regulator earlier in the year also raised serious governance issues about the tea auction in Mombasa.

At Sh26.50 a kilogramme, Meru’s Imenti Tea Factory is the highest payer, with the top 34 slots also taken up by factories in the central Kenya region.

The lowest payer in the tea-growing counties of Meru, Kiambu, Murang’a, Embu and Kirinyaga will pay between Sh16.02 and Sh26.50.

Only three factories — Nyamira’s Nyansiongo and Tombe, and Kericho’s Momul — will pay between Sh15 and Sh15.90, the data shows.

PAYMENT ANNOUNCEMENT

The majority of the factories operating in the tea-growing regions west of the Rift Valley will receive between Sh8.50 and Sh16 per kilogramme.

The Kenya Tea Development Agency (KTDA), which manages more than 600,000 farmers in 14 counties, is expected to officially announce the payment on Wednesday, ahead of the disbursement of the money in the third week of October.

“All the information will be made available at a media briefing scheduled to be held on Wednesday this week,” said KTDA officials in an email response.

Historically, factories around the Mt Kenya region have fetched higher payments than those in western Kenya based on a skewed marketing concept and buyer preferences at the auction.

HIGHLY INDEBTED FACTORIES

Factories west of the Rift Valley are highly indebted to banks for loans to expand processing capacities to match increased acreage.

All 34 factories in central Kenya have full status, while in western Kenya 11 factories are satellites of 20 older ones.

KTDA manages 65 tea factories, but 11 of them — concentrated in the west of the Rift Valley — are satellites of 54 and do not enjoy full status.

This means they cannot market their tea at the weekly Mombasa auction, and neither can they elect directors.