Smallholder tea farmers will now receive payment for their green leaf deliveries in the first week of the following month, translating to faster access to their cash according to Kenya Tea Development Agency (KTDA).
Payments for deliveries have previously been made on the third week of the following month, and the change responds to farmers’ requests for faster remittance.
KTDA says that payments for 125 million kilos of green leaf delivered to KTDA-managed factories in November 2021, totalling Ksh2.58 billion, have already been dispatched to the banks. It adds that the change in payment dates is the latest development in the reforms journey initiated by the board that took over at KTDA in July 2021 and has been keen to deliver maximum value to growers.
“KTDA Holdings board has introduced this new payment system to help farmers access cash from their tea deliveries early enough to meet their daily needs and monthly obligations,” KTDA Holdings chairman David Ichoho said.
The change in payment regime is also aligned with other financial obligations which normally happen at the end of the month like salaries, rent etc. The delay in payments has seen cash-strapped farmers sometimes resort to leaf hawking to unlock earlier access to money, and the change by KTDA is now expected to deal with the practice.
Mr Ichoho also noted the change is in line with the tea reforms adding that the board and management are listening and are responsive to farmers’ needs. “We continue to push for real changes in the lives of tea farmers. Despite some resistance, we have continued to implement the reforms as mandated by our farmers,” he said.
Among other changes introduced by the new board is the reserve price for teas from KTDA-managed factories. KTDA introduced a reserve price of USD2.43 per kilo of made tea on July 10, informed by a deteriorating market that had seen selling prices nearly slip below the cost of production. Since then, the prices of KTDA teas at the auction have rallied from USD1.9 – before the introduction of the reserve price – to a multi-year high of USD3.11 last week.
Other changes introduced by the board include an increase in monthly pay to Ksh 20 per kilo for growers in regions five, six and seven, and Ksh 21 for regions one to four; the successful lobbying for a Ksh1 billion 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.