The Kenya Tea Development Agency (KTDA) has disbursed Sh3 billion as payment to its smallholder tea farmers.
The payment is 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, according to KTDA.
The payment follows KTDA’s decision last month to change the payment cycle for its farmers to the first week of the following month.
The change is from the third week, translating to faster access of payment by the farmers.
The Sh3 billion payment reflects 137.3 million kilos of green leaf delivered to KTDA-managed factories in December 2021.
This is up from the Sh2.58 billion that was paid last month for November 2021 deliveries according to The Star.
In a statement, KTDA CEO Wilson Muthaura confirmed that payments were made in line with the payment schedule change 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,” Muthaura said.
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,” he added.
The change in the payment cycle is part of reforms being instituted by the new KTDA Holdings Board.
Since then, the prices of KTDA teas at the auction have rallied from $1.9 – before the introduction of the reserve price – to an average of $2.92 at the last auction.
Other changes introduced by the board include an increase in monthly payments to Sh20 per kilo for growers in regions five, six, and seven, and Sh21 for regions one to four.
Other changes include the successful lobbying for a Sh1 billion fertilizer subsidy from the State; and a reduction of interest rates charged by Greenland Fedha (KTDA’s microfinance institution) to eight percent per annum.
This is to boost affordable credit access and reduce the burden of loans for tea farmers.