Over 560,000 small scale tea farmers across the country have a reason to smile after the Kenya Tea Development Agency (KTDA) announced a bonus Sh37.51 per kilo of green leaf.
This represents a three percent increase from last yearâ€™s bonus payment of Sh36.40 making it the highest payment to small scale tea farmers in the world.
Announcing the results, KTDA Holdings Chief Executive Officer Lerionka Tiampati said the farmers will start pocketing their bonus, which is the second payment, from October 20.
â€œNormally we pay them from the October 20 every year, and it is going to remain the same. Most of the farmers are happy for the period, at which we pay them, and they have not asked us to change. They always insist that they donâ€™t want the full payment every month, â€œsaid Tiampati.
Total payment per kilo of green leaf will now add up to Sh50.01 this year compared to Sh48.40 last year, with the cumulative amount going up by 12 percent from Sh40.5 billion last year to Sh45.31 billion.
Gross revenues increased by 12 percent from Sh54.6 billion to Sh61.4billion this year.
Tiampati attributed the good results to improved tea production, better tea prices and favourable foreign exchange rates.
â€œThe average net selling price increased to Sh273 up from Sh248.9 per kilo in 2011 and this is a 12 percent increase. The price has been steadily rising from about Sh138 in 2008 to the current Sh273 this year,â€ added Tiampati.
Crop production increased by eight percent to 907 million Kilograms this year compared to 837 last year with 203 million Kilograms being sold compared to 211million kilos sold last year.
Despite the good performance the cost of operation increased by 15 percent to Sh77.71 per Kg of processed tea from Sh67.47 recorded in 2011.
â€œThe tea industry has continued to face several challenges relating to high cost of production, unpredictable exchange rates, decreasing farm sizes and adverse weather conditions,â€ he said.
He said KTDA has embarked on a number of initiatives aimed at reducing energy costs, the main one being development of small hydro power stations.
Compared to other local tea producers in terms of total payment, KTDA was leading at Sh50.01, followed by Eastern Produce which will pay its farmers Sh43.20 per kilo of green leaf. Finlays paid its farmers Sh41.20 per kilo, with Maramba tea Factory paying Sh37 per Kilo among others.
In comparison with other countries, KTDA was followed by Sri Lanka which will pay its small scale tea farmers Sh41.19 per Kilo, followed by Nepal and India at Sh31.66 and Sh24.09 respectively.
Tanzania farmers are expected to get the least payment of Sh9.21 per Kilo.