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Smallholder tea farmers under the Kenya Tea Development Agency (KTDA) are set to receive reduced bonus payments for the financial year ending June 30, 2025, largely due to unfavourable international market conditions and a stronger Kenyan Shilling. The development has sparked concern among growers, prompting calls for clarity and reforms within the sector.
The Kenya Tea Development Agency (KTDA) has announced a significant reduction in the second bonus payment for tea farmers for the financial year concluding on June 30, 2025. This decline, which has seen farmers earn between KSh 0.80 and KSh 19.10 less per kilogram compared to the previous year, is primarily attributed to challenging international market conditions and adverse currency exchange movements.
KTDA, which manages 77 factories serving approximately 680,000 small-scale growers, stated that the average exchange rate for the Kenya Shilling strengthened to KSh 129 against the US dollar in 2025, down from an average of KSh 144 in 2024. This appreciation meant that even with stable international tea prices, the local currency equivalent of earnings was significantly lower.
The impact of the reduced bonuses is not uniform across all tea-growing regions. Farmers in the East of Rift Valley, particularly in the Mt. Kenya region, are projected to receive second payments ranging from KSh 26 to KSh 57 per kilogram. In contrast, growers in the Rift Valley and South Nyanza are facing considerably lower rates, between KSh 10 and KSh 32 per kilogram, marking some of the lowest rates in recent years.
For instance, Kiru Tea Factory in Murang'a will pay KSh 32 per kilo, a notable drop from KSh 51.10 last year. Embu's Rukuriri Tea Factory, while leading nationally, will pay KSh 57.50 per kilogram, still a decrease from KSh 61.50 in 2024. Conversely, farmers supplying factories like Kiamokama and Rianyamwamu in the West of Rift will receive as little as KSh 10 per kilogram, half of what they earned in the previous year.
Kenya is a leading global exporter of black tea and the second-largest producer after China. The tea industry is a significant contributor to the country's economy, providing employment for thousands. The sector operates under the technical and policy guidance of the Ministry of Agriculture, with the Tea Directorate established under the Tea Act (Cap 343) regulating tea growing and manufacturing.
Despite its global standing, Kenya's tea market faces challenges such as fluctuating global prices, climate change impacts, and competition. The industry's heavy reliance on bulk exports through the Mombasa auction exposes farmers to price volatility. Disruptions from international conflicts, including the Russia-Ukraine war, Red Sea attacks, and the Sudan conflict, have also impacted global buying.
The disparities and reduced payouts have led to anger among farmers, with some threatening to uproot their tea bushes and switch to alternative crops. KTDA Zonal Director for Kaptebenget zone, Cheruiyot Baliach, has called for reforms to address these longstanding differences. Kericho Governor Erick Mutai has advocated for a second auction in the South Rift to expand markets and reduce regional price gaps.
KTDA has urged stakeholders to avoid politicising the issue, warning that such actions could further harm farmers. The agency maintains that the solution lies in maintaining high-quality green leaf, disciplined factory management, and adherence to good agricultural practices.
The reduced bonus payments pose a significant threat to the livelihoods of smallholder tea farmers, potentially leading to increased poverty and economic instability in tea-growing regions. The discontent could also lead to further protests and disruptions in tea harvesting, impacting overall production and export volumes. The regional disparities in payments could exacerbate existing socio-economic inequalities and fuel political tensions within the sector. Furthermore, a shift by farmers to alternative crops could have long-term implications for Kenya's position as a leading tea producer.
The full extent of the financial impact on individual farmers and the specific measures the government will take to address the farmers' grievances remain unclear. The long-term effectiveness of KTDA's proposed strategies to stabilize farmer incomes, such as diversifying into orthodox teas and exploring new markets, is yet to be seen.
Stakeholders will be closely monitoring KTDA's implementation of measures to diversify tea products and explore new markets, particularly in China. The government's response to calls for reforms, including the potential establishment of a second tea auction in the South Rift, will also be a key area of focus. The ongoing dialogue between KTDA, farmers, and political leaders will be crucial in shaping the future of Kenya's tea industry.
The Tea Act 2020 provides the regulatory framework for the tea industry in Kenya, establishing the Tea Board of Kenya to develop, promote, and regulate the sector. Recent reforms have aimed to streamline farmer payments and improve market efficiency. The broader agricultural policy, as outlined in the Crops Act (2013), also influences the tea sector.
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