Tea farmers are set to receive 28 billion shillings as final bonus payment from 54 Tea Factory companies managed by the Kenya Tea Development Agency.
The money pushes the total payment for the financial year ending June 2020 to 52 billion up from 46.5 billion last year.
The increased bonus payment comes at a time when the agency is rocked in a bitter tussle with the government over the management and payment of tea bonuses.
This year’s total payment represents an 11.6% increase from last year, and means that, on average, farmers will take home more earnings than they did last year.
The growth is attributed to an increased green leaf production by the factories, which grew by 29 per cent for the year to stand at 1.45 billion kilograms compared to 1.13 billion kilograms over a similar period last year, as well as a more favorable exchange rate.
This is despite the average price for a kilo of sold tea falling by 8.1 percent to an average twelve-year low of 250 shillings per kilo compared to 265 shillings per kilo in 2019.
The volume of processed tea produced by the 54 factories increased to 326 million kilograms (kgs) for the year, up from 267 million kilograms last year.
On average, 4.5kgs of green leaf make one kilogram of processed tea.
Consequently, turnover for the 54 Tea Factory Companies grew by 14% to stand Kes 79 billion compared to Kes 69 billion in 2019.
KTDA Managing Director, Alfred Njagi said other than for a few factories whose crop did not increase materially for various reasons, on average, tea farmers will take home higher earnings this year on the back of increased tea production due to good weather, which was further supported by a favorable currency exchange environment.
The business environment was characterized by lower purchasing power and COVID-19 disruptions in key markets.
The tea industry has been thrown into confusion due to a series push and pull between the ministry of agriculture and the tea agency over plans to streamline the industry by reforming the tea value chain in the country.