State plans Sh20bn fund to cushion tea farmers – Business Daily

Agriculture Cabinet Secretary Peter Munya. PHOTO | EVANS HABIL | NMG
Tea farmers will benefit from a Sh19.5 billion price stabilisation fund that the Ministry of Agriculture is establishing to safeguard earnings in the event the price of the commodity drops significantly in the market.
The fund will be created from the levy that the Tea Board of Kenya (TBK) will collect from the sector with additional resources coming from the exchequer.
Speaking when he launched the report of a taskforce on tea prices stabilisation framework on Monday, Agriculture Cabinet Secretary Peter Munya said implementation of the recommendations will be key in addressing the issue of low earnings by farmers.
“Inefficient price discovery, fluctuating international tea prices, collusion and conflict of interest among value chain players, limited range of market destinations and low domestic consumption of tea are among the challenges affecting the sector at trading level,” said Mr Munya.
The Treasury will provide Sh6 billion towards the kitty in the next two financial years according to a report seen by the Business Daily.
The stabilisation fund comes at a time when farmers are already enjoying a minimum price of $2.45 (Sh279) for a kilogramme of tea, which was introduced in June last year.
Mr Munya said the minimum price, which was established after the price of the beverage fell to a 10 year low, has so far seen farmers’ earnings increase by Sh13 billion between June and December last year.
The acting chief executive officer of TBK Peris Mudinda said the fund will offer farmers a much-needed cushion when the price of the beverage in the market is depressed.
The Irungu Nyakeira-led taskforce was appointed by Mr Munya in April 2021 to look into ways of creating a stabilisation fund that would cushion tea farmers.
The objective of the task force was to develop a price stabilisation framework for the tea industry in Kenya, evaluate the resource requirements and possible sources to support the stabilisation fund.
The taskforce has recommended a reduction in production costs and increase of productivity at the farm level and it has urged the government to facilitates bulk procurement of fertiliser, introduction of machine for plucking and pruning and replacement of old tea bushes with high yielding clones.
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