NAIROBI, Kenya Feb 5 – Tea factory boards in Region Five, covering Kericho and Bomet counties, have resolved to maintain the current monthly green leaf payment rate of Sh23 per kilogram, citing weak market performance and constrained factory finances.
The decision was reached during a regional meeting held yesterday at Kapkatet Tea Factory, bringing together factory chairmen and board members under the Kenya Tea Development Agency (KTDA) management framework.
In a joint resolution, the boards said the 2024/2025 financial year was characterised by low tea absorption and depressed auction prices, a combination that significantly undermined factory revenues and disrupted cash flows.
“The financial position of the factories does not allow for an upward adjustment of the monthly green leaf payment at this time,” the boards said.
The communique also noted that subdued global demand and price volatility at the Mombasa Tea Auction had weighed heavily on earnings.
Lower Volumes
Factory leadership further observed that the volume of green leaf delivered to factories has declined, worsening the cash flow position and limiting factories’ ability to meet operational costs while sustaining farmer payments.
Farmers were urged to continue delivering their produce, with factory boards saying improved volumes would be critical in positioning factories to benefit from anticipated better earnings in the coming months, should market conditions stabilise.
“Consistent supply is essential for factories to maximise returns when prices improve,” the boards said.
Payment Review
While holding the rate at Sh23 for now, the boards left the door open for a possible increase, resolving to review the monthly green leaf payment in the near future, subject to improved factory performance.
Factory chairmen and regional board members committed to working closely with management to reverse the low earnings recorded last year, focusing on cost control, efficiency, and market positioning.
They also appealed to farmers to maintain high plucking standards, noting that leaf quality remains a critical determinant of prices realised at the auction.
“Quality directly affects factory returns. Better plucking standards translate into better prices and, ultimately, better payments to farmers,” the leaders said.
The Region Five decision mirrors similar outcomes in other KTDA-managed zones, where factory boards have taken a cautious approach to monthly payments amid continued market uncertainty.
In recent months, factories in parts of Nyanza, Central and West of Rift regions have either maintained or marginally adjusted green leaf payments after reviews showed that low international prices, reduced buyer activity and rising operational costs were eroding margins.
Reports across the country have indicated that bonus payouts for the current cycle are also expected to come under pressure, with some regions projecting lower final earnings compared to previous years.
Industry analysts attribute the situation to a mix of global oversupply, soft demand in key export markets, currency fluctuations, and higher production costs, factors that have combined to weaken factory profitability.
