The Kenya Tea Development Agency (KTDA) will refund farmers Sh1.3 billion in cash after failing to buy fertiliser for growers in the current year.
The cash to be paid with a yet-to-be-disclosed interest rate follows disruptions in the import chain because of the Covid-19 pandemic.
The move means that growers will have to contend with the commercial market rate for the input, which is normally higher than what they would have paid through the agency given the economies of scale.
KTDA normally imports fertiliser on behalf of its more than 600,000 small-holder farmers for application during the short rains in October and November.
ECONOMIES OF SCALE
Bulk imports enable tea producers to benefit from economies of scale, competitive prices and deliveries right to their tea-buying centres, meaning less expenditure on their part and a readily available farm input every year.
KTDA said in a statement: “The disruption caused by the Covid-19 pandemic makes it impossible for the fertiliser to be delivered in time for application by the farmers.”
“Farmers will be refunded the contributions they have made in the last seven months along with accrued interest,” it added.
The agency said it sought advice from the Tea Research Institute on the effects on productivity of skipping one year of fertiliser application.
“The advice was that it is possible to skip one year with no significant losses in yields, subject to adequate rainfall. However, the subsequent application should not be delayed, to avoid further yield losses,” the agency said.
Farmers will get their refund at the end of this month, KTDA said, and advised those who may wish to apply fertiliser to their crop, notwithstanding the advice of skipping, to source the supplement from government-approved commercial suppliers with tea fertiliser stocks.
The fertiliser at the market costs about Sh3,000 for a 50 kilogramme bag, while growers would have obtained the same at less than Sh2,000 from KTDA.
Last year the agency imported 1.9 million bags and sold to farmers at Sh1,996 for a 50 kilogramme bag.
Tea farmers affiliated to KTDA-managed factories are also slated to receive Sh649 million this month from their tea factories, being dividends received from KTDA Holdings Ltd and its subsidiaries for the financial year ending June 30, 2019.