Tea earnings grow to reach Sh85.74 billion

Tea earnings rose by 9.4 per cent last season to hit a record Sh85.74 billion setting up farmers for handsome earnings.

This is despite high supply of green leaf dampening returns per kilogramme of the produce.

It also marks the third year of improved earnings consecutively.

Farmers are as such set to receive higher returns on account of improved production despite lower price per kilogramme of green leaf delivered which stood at an average rate of Sh52.51, a drop from Sh58.61 earned in 2017.

Kenya Tea Development Agency linked the drop in price per kilogramme to “escalating costs of production and depressed prices” during the last quarter of the financial year.

Consequently during the year, tea farmers earned a total of Sh62.35 billion as take home pay, 8.6 per cent higher than the Sh57.44 billion paid out in the year to June 2017, translating to better average returns for the over 600,000 growers according to the agency.

The farmers have already earned Sh18.03 billion in initial monthly payments and will receive Sh44.33 billion second payment later this month.

The payout represents a return of 73 per cent of the total tea revenue, while the remaining 27 per cent “went to cover various costs of production,” KTDA said.

“The increased earnings this year were due to high volumes of green leaf produced by farmers as a result of improved rainfall and stable tea prices,” KTDA group chief executive Lerionka Tiampati said. The agency said the period saw a 21 per cent growth in green leaf production as tea-growing areas received improved rainfall compared to the dry conditions experienced the previous year.

KTDA-managed tea factories received a cumulative 1.18 billion kilogrammes of green leaf up from 976.78 million logged during the same period in 2017.

Farmers earn Sh15 per kilogramme of green leaf delivered per month while the rest is paid as second payment after a financial year ends. bKTDA said its factories faced a number of challenges such as high costs of energy and labour among others.

“The factories are also grappling with other challenges such as tea hawking that has led to a reduction in the quantity of green leaf available to some factories, thereby affecting their operating capacity, and quality of leaf available for processing,” it said.

To deal with rising costs of production, KTDA said, factories are investing in small hydropower stations (SHPs) to deliver affordable power to factories. Some of the SHPs that have been completed and are generating electricity include Imenti, Gura and Chania.

Factories have, the agency added, also established wood plantations that are expected to be a long term source of fuel for factories.