The tea industry remains one of the key pillars in Kenya’s socio economic agenda, supporting over 6.5 million people who are engaged directly and indirectly in the value chain.
It is the leading foreign exchange earner and statistics from the Ministry of Agriculture, Livestock, Fisheries and Cooperatives show that in the last five years, it has earned the country an average of Kshs. 126 Billion annually. It is a source of livelihood to over 680,000 tea growers, 90% of which are smallholder who account for 56% of the total production. The county’s tea proceeds ranges from Kshs. 3-4 Billion (3% of earnings).
Despite all this, the total Green leaf payment by Kenya Tea Development Authority (KTDA) management agency to the tea growers has been on a declining trend since 2016/17. The total payout to the growers declined from Kshs.58.76 per Kg of Greenleaf in 2016/17 to 52.83 in 2017/18 and 41.27 in 2018/19.
The statistics further show that out of the total payment, Kshs. 16 is paid out monthly to the farmer to offset the farm gate cost of production, which include plucking labour at between Kshs. 10-12 per Kg of Greenleaf and fertilizer whose cost is about Kshs. 4-5.
This implies that the farmer is left with no income at the end of the month as all his monthly payment is used to meet the cost of inputs. In this regard, the grower relies on Bonus payment as the only income from the sale of Greenleaf.
For the period 2018/19 when the total payout declined to K.sh 41.27, the bonus also declined to K.sh 25.27 per Kg of Greenleaf.
The Ministry says the smallholder farm sizes are small and averages 0.5 Acres each with an average of 2,100 tea bushes. Using an average productivity of 0.9 Kgs of Greenleaf per bush per year, the Ministry puts annual tea production per household to about 1890Kgs.
With a Bonus payment of Kshs. 25.27 per Kg of Greenleaf as was the case in 2018/19, the average household income from tea for the smallholder grower was Kshs 47,760, which translated to a daily income of Kshs. 130 per household.
Going by the statistics, household income for smallholder tea growers was below the poverty line (less than 1.5 US Dollar per day). This was the scenario for about 70% of the 620,000 smallholder tea growers whose area under tea is 0.5 Acres and below.
The Ministry further says that any Bonus payment of below Kshs. 28 would make the farmer live below the poverty line. It adds that going by the 2019/20 tea prices trend, the average Bonus payout to the growers is expected to decline further from Kshs. 25.27 per Kg of Greenleaf realized in 2018/19.
The Ministry concludes that the tea farmer is operating at a loss and if the trend is not immediately addressed the country runs the risk of the industry collapsing with the consequential impact on the livelihoods of millions of Kenyans and the country’s socio-economic development. It has therefore laid out various interventions intended to reverse this trend.