Kshs. 2.7 Billion mini bonus included in Kshs. 5.5 billion released to tea farmers

Agriculture CS Mithika Linturi during the announcement of the payment to tea farmers

The Kenya Tea Development Agency (KTDA) managed factories have today disbursed Kshs 5.5 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. 

Farmers can expect to receive payment into their accounts in the next few days – based on respective banks’ processes and timelines. 

Of this amount, 2.7 billion is payment with respect to mini bonuses for the factories whose directors passed resolutions to pay mini bonuses to their farmers. The balance of Kshs 2.8 billion will go towards paying farmers for the December green leaf delivered to factories.

Farmers will be paid between Kshs 5 and Kshs 10 as mini bonus per kilo of green leaf delivered to their factories for the six months up to December 31st, 2022.

The Kshs 2.7 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 Kshs 326 per kilogram of made tea compared to Kshs 306 over the same period in the 2020/2021 financial year.

Commenting on this, KTDA Holdings Chairman, David Ichoho said: “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. 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. 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 compute the proper amounts to pay farmers.”

“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,” he added.

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

Only farmers in factories in Zones 1 – 9 will be receiving the mini bonuses, with those in Zones 10 to 12 traditionally holding off from paying, instead making a singular payment as part of the final 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. This model allows farmers to spread their earning through the year to cater for 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 Kshs 20 per kilo for growers in regions five, six and seven, and Kshs 21 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 annum to boost affordable credit access and reduce the burden of the loans for tea farmers.

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