The Kenya Tea Development Agency (KTDA) increases the Mount Kenya region farmers pay who will now receive Sh5 more per kilo of tea delivered to factories monthly.
The growers will receive Sh21 per kilo of the green leaf up from the current Sh16 monthly advance payment.
“The Board has reviewed the initial green leaf payment rate from Sh16 to Sh21 per kilo of the leaf with effect from January 2021,” reads a memo to factories in the East of Rift Valley.
According to KTDA chairman Peter Kanyago, the increment in monthly pay ends the Sh5 mini-bonus issued out in March for produce delivered to factories between July and December.
“We have increased the pay by Sh5 to increase the monthly pay… this means they will no longer enjoy the mini-bonus as the cash flow will not allow,” he said.
Further, he stated that the final payment in October, referred to as bonus, will be reduced compared to previous years.
“The farmers should expect less money in bonus payment because they will have already consumed part of the monies and we are paying them a lot more,” he added.
The agency noted that it was making the payout increases amid low prices for the commodity at the Mombasa auction.
According to a report by KTDA, tea prices had dipped by 13.3 per cent in the last seven months owing to over production that has been favoured by good weather.
The increase follows a directive by the Agriculture Cabinet Secretary Peter Munya issued last year to KTDA to pay farmers 50 per cent of the total value of the green leaf that they have delivered to the factories with the remainder, normally referred to as a bonus, to be paid within the financial year.
The move is part of changes proposed to get rid of the tea giant cartels that have supressed the multibillion-sector that has made farmers earn less through underpayments.
On Friday, through an Executive Order, President Uhuru Kenyatta directed the Attorney General to conduct an inquiry into the workings of KTDA and the activities of its directors.
The inquiry will look into the “alleged statutory and regulatory compliance breaches allegedly committed by KTDA and its directors,” including “potential price and auction manipulation, abuse of dominance, insider trading, wastefulness and breach of directors’ fiduciary duties.”
The price of tea is based on a number of attributes, which consumers use in deciding the value of the commodity. Some of the parameters include the aroma and taste.
Where the produce is grown geographically plays a key role in determining the quality, which informs consumers’ preferences.
The new payment mode will be implemented this month.
