NAIROBI, Kenya – The government has set a goal to raise tea farmers’ earnings from greenleaf to Sh100 per kilogram by 2027, nearly doubling the current initial payment range of Sh23 to Sh25 per kilo.
Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe said the sector is undergoing comprehensive reforms to stabilise prices, improve tea quality, and ensure farmers earn fair and predictable returns.
“We are aligning the value chain from production to marketing, so that every farmer, whether in Kericho or Meru, gets transparent and uniform earnings,” Kagwe told Parliament.
Two-Tier Payment Model and Bonus Variability
Kagwe explained that farmers are paid through a two-tier model: a monthly initial payment and an annual second payment. The bonus depends on auction prices, exchange rates, and production costs.
According to the Tea Board of Kenya, the 2024–25 financial year saw average prices at the Mombasa auction fall from $2.54 (Sh326) to $2.41 (Sh311) per kilogram of made tea.
Kagwe attributed the decline to forex shortages in key markets, conflict in Sudan, and market access issues in Iran — markets that account for 70% of Kenya’s tea exports.
Regional Price Disparities and Production Costs
The CS also highlighted regional disparities. Factories east of the Rift averaged $2.95 (Sh381) per kilo at auction, while those in the west averaged $1.78 (Sh229), largely due to quality differences.
“As a result, farmers in the East earned about Sh69 per kilo of greenleaf, while their counterparts in the West received only Sh38. The national average stood at Sh56,” Kagwe said.
Production costs have risen sharply, hitting Sh112.96 per kilo of made tea, and inefficiencies in western factories pushed costs up to Sh134.34.
Government Interventions to Revive the Sector
To reverse the decline, the government has rolled out several interventions, including:
- Mandatory greenleaf quality standards
- A tea quality laboratory in Mombasa
- Factory modernisation through a Sh3.7 billion concessional loan
- Removal of reserve prices to boost auction demand
- Crackdown on greenleaf theft and hawking
- Digital marketing platforms for tea
- Aggressive trade diplomacy under the African Continental Free Trade Area
- Implementation of the Tea Levy Regulations, 2024
- Reviewing bonus payments to allow quarterly disbursements
Sugar Sector Reforms Also Highlighted
Kagwe also reassured sugarcane farmers that investments by private firms leasing four state-owned mills will revert to the government after 30 years.
The mills — Sony, Nzoia, Chemelil, and Muhoroni — were handed to private operators on May 10, 2025, under long-term concessions aimed at reviving production.
Lease terms include annual payments of Sh40,000 per hectare (Chemelil, Muhoroni, Sony) and Sh45,000 per hectare (Nzoia), plus concession fees and goodwill payments.
Kagwe said the Sugar Act, 2024, and the Kenya Sugar Board will enforce oversight to prevent monopolies and protect farmers.
