KTDA Addresses Farmer Concerns Over Reduced Tea Bonus

KIAMBU, Kenya – The Kenya Tea Development Agency (KTDA) has moved to allay fears among tea farmers and the wider public following a notable decrease in the second payment, commonly referred to as the 'bonus', distributed by its managed tea factories. The agency, in a press statement released on Monday, September 30, 2025, attributed the decline in earnings to a confluence of challenging international market dynamics and a strengthening Kenyan shilling.

The core of KTDA's explanation hinges on two critical factors: the prevailing international tea prices and the fluctuating foreign exchange rates. The agency highlighted that the global tea market has experienced a downturn, impacting the prices fetched for Kenyan tea exports. This directly translates to lower revenue for factories and, consequently, reduced payouts to farmers.

Furthermore, the appreciation of the Kenyan shilling against major international currencies, particularly the US dollar, has played a significant role. KTDA provided specific figures to illustrate this point:

• In 2024, the Kenyan shilling traded at an average of Ksh144 to the US dollar.
• In 2025, the average exchange rate saw the shilling strengthen to Ksh129 against the US dollar.

This difference means that for every dollar earned from tea exports, factories received fewer shillings in 2025 compared to 2024. Since farmers are paid in Kenyan shillings, a stronger local currency effectively reduces the shilling-equivalent value of their dollar-denominated sales.

The tea sector is a cornerstone of Kenya's agricultural economy, supporting millions of livelihoods directly and indirectly. The annual bonus payment is a crucial component of farmers' income, often used to cover significant household expenses, invest in farm improvements, or settle debts. A reduction in this payment can have far-reaching socio-economic implications for tea-growing regions.

Industry analysts have noted that this development is likely to spark considerable public debate and could influence near-term policy decisions related to agricultural subsidies, trade agreements, and currency management. Stakeholders, including farmer representatives and agricultural economists, are urging the government and KTDA to provide further clarity on the long-term outlook for tea prices, the strategies being implemented to mitigate currency risks, and any safeguards that might be put in place to protect farmers from future market volatilities.

Farmers in various tea-growing counties, including Kiambu, Murang'a, Nyeri, and Kericho, have expressed their disappointment and concern over the reduced bonus. Many had anticipated higher earnings, especially given the rising cost of living. The KTDA's clarification, while providing a technical explanation, may not fully appease those who are now facing financial strain.

The agency has reiterated its commitment to working towards improving farmer earnings and exploring avenues to enhance the value of Kenyan tea in the international market. This includes efforts to diversify markets, improve tea quality, and explore value-addition initiatives. However, the immediate challenge remains managing farmer expectations and addressing the economic impact of the current bonus reduction.

The situation underscores the inherent vulnerabilities of commodity-dependent economies to global market fluctuations and currency movements. As the debate continues, all eyes will be on how KTDA and the government respond to the concerns of tea farmers, who are vital contributors to Kenya's economic prosperity.