Tea farmers from Ngere tea factory have started packaging their produce to boost their returns.
The farmers said that depending on auction places them at the mercy of a fluctuating global market, reducing their earnings at times.
Kenya Tea Development Agency, which manages tea factories, depends on the Mombasa auction to sell the farmers' tea.
Ngere tea factory chairperson, Joseph Karanja, said the factory has started the programme with the aim of reducing the amount of tea sold through the auction by about 20 per cent of the processed tea.
It has launched Highland Classic tea that is packed in packages as small as 20 grammes with a kilogramme selling at Sh400.
Karanja said at the Mombasa auction, tea prices can slump to about Sh320 and Sh534, which is still low.
“But with the programme, we will be able to get a consistent price that will enable the factory to stabilise its cash flow while giving farmers a guaranteed return,” he said.
Ngere tea factory, which has about 9,000 active farmers, produces about 800,000kg of processed tea each month, meaning about 200,000kg will be packaged and sold at the factory level.
Karanja said the climate change that has brought about prolonged drought has seen farmers earning less from the crop in the recent past, underscoring the need to come up with measures that will ensure farmers benefit from their hard work.
As such, the chairperson said the factory plans to roll out several brands of tea, targeting both local and international markets.
In the first phase of the project, the factory will sell tea that is not packed in tea bags to test the market and later release another brand that will have tea bags.
A premium brand targeting the global market will then be packaged, with Karanja saying that they have studied buyers and know the kind of tea they want.
“Everyone depends on the Mombasa auction but our board has decided that that is not enough. We have been producing global quality tea yet its impact has not been felt by farmers. This is now our factory’s side hustle,” he said.
“Kenyans now have a chance of tasting our tea and once they do, they will not regret it. We have packaged it in small packages to make them accessible to Kenyans of all walks of life while our farmers get an extra coin.”
Karanja said due to the high quality produced by local farmers, the demand for the factory’s tea is high and that it has buyers who exclusively buy its tea at the auction.
Once it reduces the quantity of tea at the auction, the factory will reduce the supply while driving up the demand, which will increase tea prices.
He said the project is in line with the government’s plan to boost value addition, saying it will empower farmers who have for a long time contended with meagre pay.
On his part, the factory’s vice chairperson James Githinji said they have been selling 95 per cent of their tea through the auction.
He said in the first phase, the factory hopes to rake in about Sh400 million in the next two years before venturing into the African market to which 30 per cent of the tea will be sold.
“Our goal is to sell only 50 per cent of our tea through the auction. As directors, we have done our calculations and agreed that the project will boost the factory’s income.”
Githinji appealed to local farmers to consider consuming the factory’s tea to have a taste of their produce while urging Kenyans to support such initiatives by local manufacturers.
He reiterated that Ngere was one of the four factories that paid Sh10 per kilogramme for the mini-bonus tea payment made in January this year, with other factories paying between Sh5 and Sh7 per kilo.
But Githinji said that the factory has been able to make financial strides after establishing a cash flow management system that has allowed it to rely less on loans and depend more on its internal resources.
“We have also been able to produce high quality tea after holding numerous sensitisation meetings with our farmers, which has increased its saleability,” he said.
KTDA chairperson, David Ichoho, who attended the launch, lauded the factory for embarking on value-addition that he said boosts the prices of commodities while creating more jobs.
He said the revenue realised from the gate sale will enable the factory to run without depending on sales from Mombasa auction, urging other factories to emulate it.
Ichoho said factories previously sold low quality to residents, and that it is now time for farmers to enjoy blended high quality tea.
He challenged Ngere, the biggest tea factory in east of Rift Valley region that includes Murang’a, Kiambu, Nyeri, Murang’a, Embu and Meru counties, to consider investing in processing of orthodox tea that has a high demand.
“We have a demand of two million kilogrammes of orthodox tea each month yet we are only able to produce about 800,000kg. I realised in the last six months, zones with orthodox tea fetched Sh5 more in the reserved price," Ichoho said.
Ichoho said the KTDA board set the reserved price at Sh324 in a move aimed at protecting small-scale tea farmers, which saw prices rise from an average of Sh200 per kilogramme to about Sh400 per kilogramme.