Tea farmers supplying their green leaves to the Kenya Tea Development Authority, KTDA, are crying foul over the dwindling tea prices and the price differences over regions and factories.
This after the agency announced the second payment of produce delivered between 1st July 2018 and 30th June 2019.
Farmers from some of the 65 small-holder tea factories affiliated to KTDA receive varied payments, but why are there disparities in bonus payments leaving some factories earning more than others?
Speaking to the Business daily, Leorionka Tiampati, the KTDA managing director explains these income variations.
1. Volume processed per factory
Processed varied volumes of tea depending on the size of the catchment area and ultimately the volumes. This determines capacity utilization at the factory level and hence cost-efficiency
2.Different prices in the market
Teas also fetch different prices in the market (auction or direct market) which is determined by the quality of the leaf, that of processed tea and customer preferences.
3. Cost of production
The cost of production also varies from factory to factory based on labour and energy efficiency, cost of credit and investment income.
4. Cash flows
Factories with healthy cash flows and which do not need to borrow will ultimately invest their surplus cash in the money markets thus earning higher interest income for their growers.
Latest figures as shown by the standard indicate that Eberege and Ogembo factories in Kisii region will pay Sh12.30 per kilogramme, while farmers in Kiamokama and Rianyamwamu are set to get Sh11.50 per kilogramme of green leaf delivered in Murang’a County, Githambo has proposed the lowest bonus payment of 27.75 per kilogramme, while Makomboki, Gacharage and Ngeere factories have proposed payments of Sh36.50, Sh37.10 and Sh37.15 per kilogramme respectively.