Why tea farmers will earn less this year

Tea farmers will earn less this year due to the reduced commodity prices at the auction in the last six months.

According to Kenya Tea Development Authority (KTDA) national chairman Peter Kanyago, farmers should not have high expectations this year as prices in the market have been unfavourable for the last four months to date.

He said the prices started deteriorating in April to date.

Though revenue in the tea sector had increased, farmers' payout rate per kilo of green leaf will be less than it was the previous year, he noted.

“Generally, revenue in the tea sector has increased but I wish to tell the farmers that the prices have been declining,” he noted.

Last year, the 68-affiliated factories run by the agency were paid at least Sh78.3 billion, a seven per cent drop from the Sh84 billion farmers had earned in 2016.

The average payout to farmers in 2016 was Sh50.26 per kilo of green leaf delivered to factories.

However, the agency did not publish the rates last year.

Taxation

At the same time, the chairman lamented that the Kenya Revenue Authority (KRA) was overtaxing the agency which cascaded down to the farmers.

He argued that KRA was being unfair while demanding a VAT on export tea.

“I would like to appeal to the government to address the issue on taxation and ensure that tea for export is not taxed,” he said.

He also complained that KRA was also taxing farmers on interest accrued from banks claiming they are separate from income it generates from tea sales.