The Kenya Tea Development Agency (KTDA) has this week disbursed KES 3 billion as payment to its smallholder tea farmers for the December 2021 green leaf deliveries to their respective factories. Farmers have already started receiving the payments – based on respective banks’ processes and timelines.
The payment follows KTDA’s decision last month to change the payment cycle for its farmers to the first week of the following month, from the third week, translating to faster access of payment by the farmers. The Kshs. 3 billion payment reflects 137.3 million kilos of green leaf delivered to KTDA-managed factories in December 2021; up from the Kshs. 2.58 billion that was paid last month for November 2021 deliveries.
Commenting on this, KTDA Holdings CEO, Wilson Muthaura said: “We are pleased to announce that the payment for the December 2021 green leaf delivery by our farmers has been made this week in line with the payment schedule change we introduced last month. Farmers can expect to be receiving their monthly pay promptly within the first week of the following month, in line with the reforms that we have put in place.”
KTDA says that the previous payment cycle denied farmers financial empowerment to meet their end-of-month financial obligations such as salaries, rent, payment for supplies, among others. Consequently, the delay in payments saw cash-strapped farmers sometimes resorting to leaf hawking to unlock earlier access to money.
The change in payment cycle is part of reforms being instituted by the new KTDA Holdings Board which also includes the introduction of the reserve price for teas from KTDA-managed factories of USD2.43 per kilo of made tea in July last year. Since then, the prices of KTDA teas at the auction have rallied from USD1.9 – before the introduction of the reserve price – to average USD 2.92 at the last auction.
Other changes introduced by the board include: an increase in monthly pay to Ksh20 per kilo for growers in regions five, six and seven, and Ksh21 for regions one to four; the successful lobbying for a Ksh1 billion fertilizer subsidy from the State; and a reduction of interest rates charged by Greenland Fedha (KTDA’s microfinance institution) to 8% per annum to boost affordable credit access and reduce the burden of the loans for tea farmers.