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KTDA Releases Kshs.21.57 Billion in Bonuses to Tea Farmers

BY Soko Directory Team · October 27, 2021 12:10 pm

KEY POINTS

A total of 600 shillings per 50 kg bag of fertilizer will be reflected in the payment in a bid to pass on the KES 1 billion fertilizer subsidy by the Government directly to the farmers.

Kenya Tea Development Agency (KTDA) has released 21.57 billion shillings in bonuses to farmers for the financial year ended June 30, 2021.

Farmers can expect the funds to reflect in their bank accounts by the end of this week.

This second payment, popularly known as bonus, has been released following the conclusion of meetings by factory directors from the 54 KTDA-managed factories.

The meetings were held between 20th September and 1st October to review the audited 12-month accounts of their factories and declare the second payment rate.

KTDA Holdings Limited Chairman, David Ichoho, stated that the agency will pass the fertilizer subsidy to farmers.

“A total of 600 shillings per 50 kg bag of fertilizer will be reflected in the payment in a bid to pass on the KES 1 billion fertilizer subsidy by the Government directly to the farmers,” he said while commenting on the development.

The second payment rate that farmers usually receive per kilogram depends on the factory income for the year based on the average price of tea fetched at the auction, costs of production, labor, and other related costs.

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The costs are deducted from the factory income and the balance is paid to farmers as a second payment (bonus). Factories also make monthly payments to farmers.

The second payment declarations come against a backdrop of an 8.3 percent drop in CTC tea prices at the Mombasa Tea Auction from an average of USD 2.38 last financial year (2019-2020) to USD 2.18 in the 2020-2021 financial year ending 30th June 2021.

Over the past financial year, farmers delivered 1.25 billion kilos of green leaf to factories, a 14 percent drop from the 2019/2020 record production of 1.45 billion kilograms.

The drop in prices in 2020/2021 follows a similar trend experienced in 2018 as high production over the years has seen supply outstrips demand and tea processors carrying forward unsold stocks.

The business was further worsened by the prevalence of the coronavirus (Covid-19) that disrupted supply chains across the globe and impacted heavily on dependent industries.

Nonetheless, the relatively favorable exchange rate of the Kenya Shilling to the US dollar has, however, helped shore up earnings from the sale of tea, which is generally dollar-denominated.

According to Ichoho, the Board and Management are working in ensuring that the farmers get optimal benefit from the tea business, urging farmers to re-invest their net earnings in increasing farm production quality to make their business more sustainable.

The KTDA-managed factories are already enjoying higher tea prices at the auction following the introduction of the minimum reserve price. This is expected to translate to higher earnings next year.

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