KTDA blames low tea prices to over supply

Written By: Regina Manyara
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Smallholder tea farmers under the Kenya Tea Development Agency are set to receive an average return of Ksh 41.27 per kilo of green leaf delivered down from Ksh52.83 paid last year.

The payout represents an average return of 67% of the total tea revenue of Ksh 69.77 billion.

KTDA Managing Director Lerionka Tiampati blames the lower-income to a slump in prices due to oversupply and high cost of production due to high cost of electricity, labor and fuel.

According to the agency, bonuses vary among factories and regions depending on a myriad of factors that include quality and output as well as the overall price that the green leaf form a particular factory fetches at the auction.

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Last year, tea farmers earned 85.74 billion shillings, which has reduced to 69.77 billion shillings, this year.

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This has pushed the average pay to tea farmers to reduce 22 per cent to 41 shillings and 27 cents per kilo of green leaf delivered, which KTDA blames on among others the high cost of production.

This development comes in the wake of allegations by a section of legislators from tea growing regions that tea pricing is controlled by cartels and are calling for an overhaul of KTDA.

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In Kirinyaga County, some farmers have been uprooting tea bushes to protest poor payout by KTDA.

Tiampati further encouraged tea farmers to diversify into orthodox tea production that is gaining traction globally especially in Russia, US, and Germany and will go a long way in reducing over-reliance on Black CTC tea.

Global tea production stands at 5.8 billion kilos while demand is at 5.6 billion kilos resulting in a 200 million kilos surplus.

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A similar situation of high surplus was last experienced in the year 2013/14 when the total earnings were Ksh 52.97 billion.

During the year, the factories processed 1.13 billion kilos of green leaf into 262 million kgs of made black tea which was sold at an average price of US$ 2.59 compared to US$3.14 realized the previous year, representing an 18% drop.

Kenya is the leading exporter of black CTC teas in the world accounting for 23% of global exports.

 

 

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