Strong dollar earns tea farmers Sh64 billion

Posted on : Wednesday , 23rd September 2015

Tea farmers have earned close to Sh10 billion more from leaves delivered in the year ended June 2015, helped by a strong US dollar and high pricing of the commodity in the world market.

Latest industry performance data released Tuesday shows that growers affiliated to the Kenya Tea Development Agency (KTDA) have received Sh28.7 billion in the second round of payment for their produce compared to the Sh19 billion they earned in a similar period the previous year.

This brings to Sh63.6 billion the total earnings for the 2014/2015 financial year compared to the Sh52.6 billion earned in the 2013/2014 financial year.

“Our performance this year has improved compared to last year mainly because of the strong dollar and good market prices,” said KTDA managing director Lerionka Tiampati.

The Kenyan shilling has been weakening against the US dollar since January and is currently trading at Sh105 against the greenback, bringing relief to the exporters.

Kenya sells 95 per cent of its tea leaves in the world market. Tea farmers have so far been paid Sh14.55 billion in preliminary disbursements priced at Sh14 per kilo every month. KTDA said the final payments – popularly known as bonuses, would be made next month.

The growth in tea revenues has been attributed to the decline in volumes of tea sold at the Mombasa auction, which helped to push demand for the beverage resulting to better prices.

A kilogramme of made tea fetched Sh260 in the year under review compared to Sh243 for the same quantity in the previous year.

Last year, tea farmers suffered a big blow as a heavy market glut pulled down international prices, leaving Kenya with the lowest earnings in six years.

READ: Tea prices hit 7-month high as demand at auction rises

A total of 240 million kilogrammes of made tea was produced in the financial year 2013/2014 compared to 256 million kilogrammes in  2014/2015.

KTDA is paying 71 per cent of total earnings to the farmers compared to 67 per cent that they earned last year.

The agency said Central Kenya farmers were poised for better bonus earnings compared to the other regions.

On average, growers from Kiambu and Thika will get Sh8 billion while their counterparts in Nandi and Kitale will be paid Sh1.3 billion.

On Tuesday, North Rift farmers complained that the differences in bonus earnings were unfair given the fact that they all sell their tea at the Mombasa auction.