Gov't unveils major tea reform to double farmers's earnings by 2027

Responding to a parliamentary question on tea bonuses, the CS explained that tea farmers are paid through a two-tier payment model comprising a monthly initial payment and an annual second payment (bonus).

Farmers currently receive between Ksh. 23 and Ksh. 25 per kilogramme as initial payment, while the bonus depends on three key factors: auction prices, exchange rates and cost of production.

During the 2024/25 financial year, average auction prices dropped to USD 2.41 per kilogramme of made tea from USD 2.54, largely due to forex shortages in Pakistan and Egypt, conflict in Sudan, and market access challenges in Iran, which collectively account for about 70% of Kenya’s tea exports.

Regional disparities were also evident, with East of Rift factories averaging USD 2.95, while West of Rift factories recorded only USD 1.78 per kilogramme due to lower quality teas.

Consequently, farmers in the East earned an average of KShs. 69 per kg of greenleaf, while those in the West received only KShs. 38, compared to the national average of KShs. 56.

Production costs also rose sharply to KShs. 112.96 per kilogramme of made tea, with West of Rift factories recording higher costs at KShs. 134.34 due to governance gaps, over-employment and inefficiencies.

To address these challenges, the Ministry has rolled out far-reaching interventions, including:

1.Mandatory Greenleaf Quality Standards

2.Establishment of a Tea Quality Laboratory in Mombasa

3.Strategic Tea Quality Improvement Programme (STQIP)

4.Modernisation of factories through a KShs. 3.7 billion concessional loan facility

5.Removal of the Reserve Price to restore market demand

6.Crackdown on greenleaf hawking and theft

7.Governance and financial audits of struggling factories

8.Expansion into digital tea marketing platforms

9.Aggressive international market diplomacy under AfCFTA

10.Introduction of the Tea Levy Regulations, 2024 to sustainably fund the industry

The CS further revealed that the Ministry is reviewing the tea bonus payment model to allow farmers to receive bonuses on a quarterly basis instead of annually, to ease liquidity challenges.

“These reforms are meant to ensure fair, transparent and uniform earnings for all tea farmers across the country, regardless of region,” said CSKagwe.