Farmers affiliated to Kenya Tea Development Agency (KTDA) are staring at low earnings in the financial year that ended June on the back of decreased volumes and lower prices at the auction.
Green leaf delivered to KTDA managed factories dropped by 8.5 percent in the year to June, occasioned by prolonged drought.
Tea prices at the auction also recorded a three percent decline with the average cost for all KTDA-managed factories standing at $2.69 compared to $2.76 a year earlier, pointing to a reduced second payment to farmers in October, popularly referred to as bonus.
The agency recorded 1.1 billion kilos of tea in the review period down from 1.3 billion realised in the corresponding period a year earlier.
Kenya experienced a severe drought in the financial year 2022/23 which led to reduced green leaf output in the farms.
Farmers earnings rose 42.4 percent to Sh62.8 billion in the last financial year when the price of the commodity rose by double digits compared with Sh44.15 billion a year earlier.
The tea sector has been grappling with market challenges since last year as it braved global tough economic times with the main buyers like Pakistan and Egypt battling a crippling dollar shortage which significantly affected sales.
“We have had the twin challenges of a severe drought and a very challenging global tea market due to lack of access to the dollar by key tea buying markets, but we are continuously working to make sure farmers get the best value for their hard work,” KTDA Management Services managing director Julius Onguso said.
Factory directors from the 71 KTDA-managed factories will this month commence meetings to review and approve the factories annual accounts for the 2022-23 financial year, ahead of the declaration of the second and final payment to farmers in October.
The meetings to determine the second payment will run from September 11 -22 and will be followed by a formal declaration of the payment rates.
“The directors will be meeting to discuss the performance of their respective factories for the year that ended in June. It is only after that they will announce the second payment rates for their specific factories,” he said.