The Kenya Tea Development Agency (KTDA) managed factories on Thursday disbursed Sh5.5 billion as payment to their smallholder tea farmers for the December 2022 green leaf deliveries, inclusive of mini-bonuses for the half year ending December 31st, 2022.

With the disbursement of the funds, farmers can expect to receive payment into their accounts in the next few days, based on respective banks’ processes and timelines.

Sh2.7 billion of this amount is payment with respect to mini bonuses for the factories whose directors passed resolutions to pay mini bonuses to their farmers. 

The balance of Sh2.8 billion will go towards paying farmers for the December green leaf delivered to factories with farmers to be paid between Sh5 and Sh10 as mini bonus per kilo of green leaf delivered to their factories for the six months up to December 31st, 2022.

The Sh2.7 billion mini bonus payment represents 449 million kilos of green leaf delivered to KTDA-managed factories over the six-month period. 

During the same period, average tea prices for KTDA at the auction stood at Sh326 per kilogram of made tea compared to Sh306 over the same period in the 2020/2021 financial year.

KTDA Holdings Chairman, David Ichoho said they were pleased to announce the payments right before schools reopen to enable farmers to meet their obligations

“We are pleased to announce that the payment for the December 2022 green leaf delivery by our farmers has been made this week, together with the mini bonus for the period July to December, 2022,” Ichoho said. 

“Farmers have been waiting for this payment and we have made it right before schools open, to enable our farmers meet their back-to-school obligations alongside other personal obligations.”

Ichoho also acknowledged the delay in payment and expressed his gratitude to the Kenyan Government for its continued support in guaranteeing farmers receive good returns for their effort.

“As part of the reforms, we promised our farmers that they will receive their pay by 5th of the month, a promise we have dutifully kept. We have delayed slightly this month to enable us to compute the proper amounts to pay to farmers,” Ichoho said.

“We wish to thank all stakeholders, particularly the Government of Kenya led by His Excellency the president, Dr William Ruto, the Deputy President Hon Rigathi Gachagua and the Cabinet Secretary for Agriculture, Hon Mithika Linturi for the continued support in ensuring farmers get better returns for their tea."

On his part, Agriculture CS Mithika Linturi assured tea farmers that the amount being dispensed was from the sale of tea last year and has not been borrowed by the government.

"This money is not borrowed, it's from the proceeds of the sale of tea. Last time there was some aspect of borrowing, but it was justified," said Linturi.   

Funds to cater for these payments have been generated through the sale of tea over the period under consideration.

Only farmers in factories in Zones 1 – 9 will receive the mini bonuses and the areas that fall within Zones 1-9 include:

Kambaa, Kagwe, Theta, Mataara, Gachege, Ngere, Njunu, Nduti, Ikumbi, Gacharage, Makomboki, Githambo, Kanyenyaini, Gatunguru, Kiru, Chinga, Gitugi, Irianini, Gathuthi, Ragati, Ndima, Mununga, Kangaita, Thumaita, Kimunye, Kathangariri, Mungania, Rukuriri, Weru, Kionyo, Imenti, Githongo, Kinoro, Michimikuru, Kiegoi, Tegat, Momul, Litein, Kapkatet, Mogogosiek, Kapset and Kapkoros.

KTDA traditionally holds off from paying those in Zones, 10 to 12 and instead makes a singular payment as part of the last payment (bonus) later in the year.

KTDA operates a two-step payment model where farmers are paid monthly, and an additional interim payment (mini bonus) and a final payment (bonus) based on the performance of each factory.

Areas that fall within the above zones include: Tombe, Kebirigo, Sanganyi, Nyansiongo, Nyankoba, Gianchore, Kiamokama, Nyamache, Ogembo, Chebut, Mudete, Kapsara

This model allows farmers to spread their earnings throughout the year to cater to their needs.

Early payment of farmers’ dues is part of reforms being instituted by the KTDA Holdings Board, the introduction of the reserve price for teas from KTDA- managed factories of USD2.43 per kilo of made tea.

Other changes introduced by the board include an increase in monthly pay to Sh20 per kilo for growers in regions five, six and seven, and Sh21 for regions one to four; importation of fertilizer and the successful lobbying for a fertilizer subsidy from the State; and a reduction of interest rates charged by Greenland Fedha (KTDA’s microfinance institution) to 8 per cent per annum to boost affordable credit access and reduce the burden of the loans for tea farmers.