Anger spreads in tea sector as farmers protest poor bonuses

Tuesday, October 8th, 2019 12:00 |
Tea farming. Photo/Courtesy

Rawlings Otini

The significant drop of tea prices and bonuses to a 10-year low this year is causing an outcry among farmers with many renewing threats to abandon the cash crop owing to low returns.

Farmers in Kirinyaga, Nyeri, Kisii and other parts of the country have started uprooting their tea bushes following low pay and bonuses that have sunk over the years.

A video has gone viral of a farmer in Nyeri uprooting tea, showing how frustrated the growers have become.

“Let me uproot anything that has a middleman,” the angry man stated. The farmers decried exploitation by middlemen who benefit from their hard work.

In Kirinyaga, there has been massive uprooting of tea bushes as bonus protested the low payout. Farmers said they had lost confidence with the cash crop because of dwindling income.

“We have no other option but to uproot tea and replace it with more profitable crops like avocado or macadamia,’’ said Kennedy Njeru.

In Bomet, Laban Rotich, who led other farmers in uprooting their tea bushes said: “It is unfortunate that after 15 years growing tea we have never experienced such low prices, we appeal to Agriculture Cabinet Secretary Mwangi Kiunjuri to intervene.”

He said their local factory, Kapkoros Tea Company, had offered Sh18 per kg in bonus compared with Sh34 offered last year.

“We have been left at the mercy of cartels operating in the sector who reap billions of shillings while growers are left to incur huge losses and without intervention from the national government we are doomed,” Rotich lamented.

However, Kirinyaga Deputy Governor Peter Ndambiri asked farmers to give the county government time to amicably solve the menace in consultation with the national government.

Small-scale tea farmers have reduced from 600,000 to the current 400,000, according to the East African Tea Traders Association. The tea sub-sector employs more than 80,000 people working in the tea estates and supports the livelihood of about three million people.

This year, small-scale tea farmers across the country are expected to earn a lower bonus compared to last year.

Growers affiliated to factories managed by Kenya Tea Development Agency (KTDA) earned Sh69.77 billion for the full year ended June 2019 compared to Sh85.74 billion last year, which represents an 18 per cent or Sh17.97 billion dip.

Green leaf

The earning represents an average return of 67 per cent of the total tea revenue, with farmers receiving an average of Sh41.27 per kilo of green leaf delivered.

Out of the Sh69.77 billion revenue, farmers earned Sh46.45 billion being the sum total of Sh17.69 billion in the initial monthly payments and Sh28.76 billion as second and final payment, which is referred to as a bonus. Last year farmers earned a bonus of Sh44.33 billion.

KTDA Chief executive officer Lerionka Tiampati attributed poor prices to the hard economic times and currency devaluation in export markets of Pakistan, Egypt, UK, UAE, Sudan and Iran. “Resumption of economic sanctions by US on Iran cut off a substantial market for our teas,” he said.

But farmers feel they have heard of this story long enough and accuse KTDA of running away from real issues affecting the sub-sector such as brokers and price-fixing at the auction.

Some players say the speciality tea that fetches high prices abroad is normally supported by marketing and branding helping them to quote high.

“This pricey tea in the UK or other countries is usually sold under a different brand after repackaging and blending,” said Edward Mudibo, Managing Director of East Africa Tea Trade Association.

Lack of local processing and packaging facilities have exposed farmers to a host of middlemen that continue to make a killing as the growers struggle.

Tea processed from both smallholders’ farms and plantation is sold in bulk through direct sales and through the auction system operated in Mombasa.

Approximately 80 per cent of tea sold in the country is sold at the Mombasa Tea Auction. The rest of the tea is traded through direct sales, or at the factory gate, either for export or local consumption at between Sh100 and Sh200 a kilo.

But farmers are not the only angry lot. In an earlier report, industry regulator Tea Board of Kenya accused players at the Mombasa Tea Auction of colluding to fix prices to deny small-scale farmers their deserved earnings.

Unorthodox practices

It accused various players especially KTDA of manipulating the price of the highest tea grade, PF1, which is mainly produced by small-scale farmers.

The grade has consistently sold at low prices or at the same price with inferior grades at the weekly auction.

Low prices at the auction, the regulator added, are precipitated by some unorthodox practices by KTDA, which controls over 65 per cent of the volumes dealt in at the auction.

“This is done in collusion with major brokers, warehouses and traders. The perpetrators continually divert attention from the real issues by citing the ad-valorem levy,” it added in the report.

Prices have continued to decline, not because of poor quality but owing to poor trade practices, the regulator said.

Kenya is the third-largest producer of tea in the world accounting for 10 per cent of the total world’s tea production. 

Because of its good quality, Kenyan tea is also used for blending with other varieties from other nations to make speciality tea.

But more than 95 per cent of the tea produced in Kenya is exported making the country the largest exporter of tea in the world accounting for 22 per cent of the total world tea exports.

The tea sub-sector is divided into two, that is, smallholder farmers and tea plantations owned by multinationals. Since independence, the smallholder sector has overtaken the plantations, accounting for 55 per cent of the national tea production and 60 per cent of the area cultivated.

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