Post: KTDA Attributes Drop in Tea Bonus to Slump in Global Market

Nairobi: The Kenya Tea Development Agency (KTDA) has attributed the drop in this year's bonuses for over 680,000 tea farmers to shifting global tea market trends. In a statement, KTDA explained that this year's second payout to smallholder tea farmers was greatly impacted by the weaker exchange rate of the Kenya Shilling against the US dollar.According to Kenya News Agency, the Kenya Shilling traded at an average of Sh144 to the dollar in 2024, whereas this year, the rate averaged at Sh129. This depreciation meant that even when international tea prices remained stable, the amount realized in Kenya Shillings was significantly lower. The agency emphasized that the drop in earnings was due to international market conditions and unfavorable currency exchange movements compared to the previous year. The agency further noted that the disappointing final payout reflects global trading conditions beyond KTDA's control.The agency reported that tea-growing counties in the West Rift experienced the highest dip in e arnings. In Kericho, the price of made tea for factories fell by Sh101 to Sh245, while in Bomet, it dropped by Sh85 to Sh209 from last year's earnings. The price of a kilogram of tea from factories in Nyamira decreased by Sh106 to Sh266, and in Kisii, it dropped by Sh95 to Sh246. In Nandi and Vihiga, a kilo of made tea fetched Sh208, representing a Sh66 drop.In contrast, tea factories in the East Rift recorded the least drop in earnings. For instance, factories in Kiambu fetched Sh371 per kilogram of made tea, a Sh46 decrease from last year. Murang'a earned Sh376 per kilo, down by Sh42, Nyeri earned Sh388 with a Sh42 drop, Kirinyaga earned Sh400 down by Sh38, Embu earned Sh404 down by Sh34, and Meru earned Sh381, a reduction of Sh46 from last year.KTDA attributed the difference between the East and West of the Rift Valley to quality factors, market dynamics, and cost structure. It noted that teas from high-altitude zones naturally fetch better prices due to their quality, which is favored in global market s, resulting in payment margins. In Nyeri, rates per kilogram of green leaf delivered to the factory averaged at Sh40 as the least amount, while the highest rates for farmers were Sh56 per kilogram.Farmers interviewed by KNA expressed contentment with this year's bonus rates despite the slight reduction. Charles Chege, a farmer affiliated with Gathuthi tea factory, remarked that the difference is less than Sh10 for many factories in Nyeri, which is not substantial compared to other zones where farmers' earnings have reduced by Sh19. Farmers delivering green leaf to the Gathuthi factory will be paid Sh56 per kilogram compared to Sh57 last year. Farmers affiliated with Chinga tea factory will receive Sh43 per kilo, representing a Sh7 reduction, while those delivering to Gitugi tea factory will earn Sh42.50 per kilogram, a Sh10.5 reduction from last year.The agency cautioned against politicizing the tea subsector, warning that it would only aggravate farmers. To stabilize farmers' earnings, KTDA plans to inc rease the production of orthodox teas, which fetch higher prices in niche markets. Additionally, KTDA announced its partnership with the government to promote value addition on tea, reduce packaging costs, and open new tea markets.KTDA assured tea farmers of its commitment to their welfare and the long-term sustainability of the sector. The agency emphasized the importance of maintaining high-quality green leaf, disciplined factory management, and adherence to good agricultural practices to secure better earnings in the future. It acknowledged that the challenges faced are global and systemic but expressed confidence that focusing on quality, efficiency, and innovation will help overcome them.