Tea farmers hit hard as glut overwhelms Nandi factories
Rains have led to oversupply, leading to waste. Multinational and small-scale tea farmers in Nandi County have incurred losses running into millions of shillings due to a surplus crop which has affected processing capacity of most factories. A majority of the factories received double their processing volume, resulting in waste. “We are receiving an average of 400,000 kilogrammes against processing capacity of 270,000 kilogrammes resulting in more than 30 per cent of the crop going to waste,” said Wilson Tuwei, the chairman of tea farmers at Siret Tea Company. The increase in production of the crop has been attributed to the recent heavy rains. Tea farmers have, however, initiated a programme to set up Sh500 million factory to increase processing capacity. “We have mobilised resources to construct a new tea factory to cushion farmers from losses due to waste caused by lack of market for the crop,” said Mr Tuwei. The county is home to 19 tea factories with multinational firms taking the lion’s share of 16. The Kenya Tea Development Authority (KTDA) has two factories, Chebut in Kapsabet and Kaptumo in Aldai. The government owned Nyayo Tea Zones Development Authority owns the Kipchabo tea factory. This comes as the multi-national tea companies are staking on cheaper electricity and steady global prices to reduce operation costs. The tea companies have expressed fears that the high cost of power was making it difficult for investors to break even and maximise production. Some factoris are generating own electricity and investing in wood fuel, especially the fast-maturing eucalyptus trees as a substitute to high cost of electricity. “The high cost of electricity is a major constraint to expansion in the tea industry and the government needs to lower the tariffs for the sector to attract more investors and create employment opportunities,” said David Langat, chairman of Koisagt Tea Company. He said most tea companies allocate significant amount of the income on energy costs which leads to increased production charges resulting in job cuts to sustain operations. According to reports by the KTDA-managed tea factories electricity cost accounts for 30 per cent of the total factory cost of production. It costs about Sh60 to process a kilo of tea but energy costs take about Sh25. As part of cost cutting, KTDA through its subsidiary power company, KTPC, has invested in hydropower projects to cut energy costs. “The on-going drought is likely to lead to power rationing due to low water volumes,” said Jackson Kosgei, a farmer from Nandi County. Global tea prices dropped by about Sh22 per kilo in 2015 but the prices increased in 2016 to about Sh30.
(c) 2017 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).