Kenyan Tea Farmers to Get Bonus Pay of Sh36.26 per Kilo

Kenyan Tea farmers will receive a second payment of Ksh44.72 Billion in bonuses according to the Kenya Tea Development Agency (KTDA).

“Kshs 17.27 billion has already been paid to growers as initial monthly payment at an average rate of Kshs 14.00 per Kg/Green leaf. The remaining sum of Ksh44.72 billion will be paid out to farmers as second payment at an average rate of Ksh36.26 per kg of green leaf, representing a 31.33 % increase over the 2014/15 average rate of Ksh27.61 per kg of green leaf.”

The smallholder tea sector earnings increased by 21 per cent to Sh 63.6 billion up from Sh52.6 billion last year.

Each farmer is set to earn an average of Sh 27.61 per kilo of green leaf as bonus, a 56.8 per cent.

Last year the farmers received a total of Sh41.61 per kilo. So far, Ksh17.27 Billion has been paid out as monthly payments.

“The improved earnings was a result of improved tea prices, increased tea volumes associated with good weather, and favourable exchange rates,” Lerionka Tiampati, managing director of the Kenya Tea Development Agency (KTDA) said in a statement.

“Overall this year, factories are paying an average 75 percent of total earnings to the farmers compared to 71 percent last year. This improvement reflects an overall improvement in tea quality, production efficiencies and cost management at the factory level, in addition to better prices,” he adds.

Price of teas from smallholder tea factories at the auction averaged USD 3.01 in the 2015/16 financial year, up from an average of USD 2.63 in the 2014/15 year, a 15 percent increase. Tea prices have reached highs of over USD 4 per kilo of made tea for some of the primary grades mainly during first half of the current financial year. However, tea prices gradually declined during second half of the year because of the forces of demand and supply.

The stable Kenyan shilling against the dollar also boosted farmers’ earnings as tea exports are paid for in US dollars. Kenya exports more than 95 percent of its made tea. The average exchange rate of the dollar is Ksh102.05 this calendar year against Ksh92 same time last year, a 11 percent improvement.

KTDA’s total income increased to KSh84 billion revenue for smallholder tea farmers for the 2015/16 financial year, compared to 63.5b earned in the 2014/15 financial year. This represents a 32.2 percent increase in earnings for smallholder tea farmers.

Crop production increased to 1,233 M Kgs from 1,039 M Kgs recorded previous year.  This translates to 18.67 percent increase.

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