Tea earnings in Kenya rose by 9.4% last season to approximately US $850m, a figure that undoubtedly set up farmers for handsome profits. This, according to media reports, is despite high supply of green leaf dampening returns per kilogram of the produce.
It also marks the third year of improved earnings consecutively. As such, farmers are set to receive higher returns on account of improved production. According to the Kenya Tea Development Agency (KTDA), the drop in price per kilogram can be attributed to “escalating costs of production and depressed prices” during the last quarter of the financial year.
Consequently during the year, tea farmers earned a total of US $617m as take home pay. The amount was reportedly 8.6% higher than the US $569 paid out in the year to June 2017. This later translated to better average returns for the over 600,000 growers according to the agency.
As of now, the farmers have already earned US $178m in initial monthly payments and will receive US $439m second payment later this month. According to a statement from KTDA, the payout is a representation of a return of 73%of the total tea revenue, while the remaining 27 % “went to cover various costs of production.
KTDA group chief executive Lerionka Tiampati further attributed this year’s increased earnings to high volumes of green leaf produced by farmers as a result of improved rainfall and stable tea prices. He further added that the agency said the period saw a 21% growth in green leaf production as tea-growing areas received improved rainfall compared to the dry conditions experienced the previous year.
KTDA-managed tea factories received a cumulative 1.18Bn kilograms of green leaf up from 976.78m from the same period in 2017.
Farmers earn US $0.15 (Sh15) per kilogram of green leaf delivered per month while the rest is paid as second payment after a financial year ends. KTDA said its factories faced a number of challenges such as high costs of energy and labor among others.