Bill seeks to reintroduce minimum prices for tea, coffee

Thursday October 17 2019

The campaign to cushion farmers from low earnings from tea and coffee exports has taken a new turn with the drafting of a Bill seeking to reintroduce guaranteed minimum prices (GMP).

The GMP which factor in production cost plus margin for farmers are still in use in a number of Asian economies, but were abolished in Kenya in 1980s as the State opted for input subsidies.

Under GMP, farmers receive subsidies when market prices fall below the set threshold as a way of motivating them to retain loss-prone farming ventures.

Kangema MP Muturi Kigano yesterday tabled notice of a motion which if adopted will see the Agriculture, Fisheries and Food Authority (AFA) set the Guaranteed Minimum Returns Schemes for farmers.

This comes as falling global prices continue to roil tea and coffee segments with smallholder farmers either threatening to uproot their crops or dump established marketing agencies.

In the year to June, tea farmers for instance earned an average of Sh41.27 per kilogramme of green leaf delivered, down from Sh52 received in the period to June 2018-the lowest returns in six years.


“The House resolves that to be able to insure and cushion farmers from any adverse effects and to be able to sustain and promote the growth of tea and coffee … Ministry of Agriculture though AFA do provide and prescribe for the guaranteed minimum returns for the farmers of tea, coffee and any crop as may be scheduled under the scheme,” reads the notice of motion.

In total, earnings for tea farmers were Sh69.7 billion representing a fall of 18 per cent from Sh85.7 billion they received in payouts in the period ended June 2018.

Kenya Tea Development Agency (KTDA) attributed the low prices to a decline in international prices occasioned by a glut in the international market, increase in the cost of production and political turmoil in key markets.

Egypt, the United Kingdom and Sudan-three of the biggest markets for Kenya’s CTC black tea are in the middle of political crisis and changes.

Kenya is the leading exporter of black tea in the world and the crop is also one of its top foreign exchange earners but the falling earnings have seen farmers in parts of Central, Kisii and Nyamira uproot their bushes in protest.