KTDA National Chairman Enos Njeru reassured smallholder tea farmers that the bonus figures announced by factory directors adhered to the established accounting standards.

Njeru said figures released by the factory companies are prepared in compliance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) as governed by the Institute of Certified Public Accountants (ICPK).

“KTDA Management Service is an ISO-certified company and is bound to comply with these standards for the proper running of factory companies,” Njeru said in a statement.

At the end of the 2023/24 fiscal year, President William Ruto estimated that KTDA earnings had increased by KSh30 billion and predicted that farmers would earn a record average bonus of KSh 70 shillings. The average is far less.

Tea exports set a record $1.4 billion (KSh181 billion) in sales in 2023, a $950 million increase from an outstanding harvest totaling 523 million kilos. A further KSh16.4 billion was sold locally for a total of Ksh197 billion about $1.525 billion USD).

However, the improvement in farmers’ payments this year is mainly due to the devaluation of the shilling, as dollar prices remain flat.

Last October, tea farmers received a Ksh 44 billion bonus in addition to KSh 24 billion in monthly payments totaling Ksh 67.67 billion (about $525 million USD). KTDA manages 69 factories, of which 17 operate as satellite units. KTDA growers harvested 1.13 billion kilos of green leaf and produced 267 million kilos of made tea.

The large export sales total raised expectations, but the annual bonus, calculated for each of the 56 KTDA-owned factories, is based on average annual sales of tea, with fewer monthly payments to growers. The cost of operations and factory overhead is then subtracted, and the remaining sum is distributed based on how many kilos each grower contributed to the total. About 45 million kilos of tea (from roughly 225 million kilos of green leaf) remain unsold.

In Bomet County, a 28-year-old protestor was killed and two others seriously injured when anti-riot police fired on looters who breached the Mogogosiek factory gate In Kirinyaga County, hundreds of tea farmers took to the streets rejecting a KSh 46 per kilo bonus.

Growers carried signs reading “Reject the peanuts” and “Kwani ni mayai,” which in Kiswahili translates as “Is it a payment for eggs?”

At the Miciimikuru factory in Meru County, protesting workers angrily set fire to 12 acres of factory-owned fields after learning their annual tea bonus was only 35 shillings. Factory board chair Stephen Kathiri told Business Daily, “Since last year, we have not sold orthodox tea and are stuck with 786,000 kilograms worth KSh 353 million at the warehouse. This negatively affected our cash flow, leading to lower pay.”

In contrast, workers at the Ngere factory earned 62, those at Nduti 60.9, Imenti 60.3, and Gathuthi 57 shillings (an increase of 13 shillings compared to last year). Workers at the Githongo factory were happy with 56 shillings; at Githambo, they were angry despite a 42 shillings per kilo bonus. This is because the newly elected board estimated the bonus would be 60 shillings when running for election last month, only to disappoint.

At the Gitugi Tea Factory, the board approved the KSh 53 per kilo bonus payment, a KSh 4 reduction from what farmers were paid last year.

The bonuses at factories west of the Great Rift Valley were meager, with workers at eight factories earning less than 25 shillings. Nyamache workers received 20 shillings, as did those at Mokama, Mwamu, Mogogo, Kapset, and Rorok. The average bonus south of the Rift was KSh 23. Bonus payments at Nyeri’s five major KTDA factories ranged from KSh 45.5 to 57.3 shillings per kilo.

“The west of the Rift has been affected more by the building up of stocks due to the minimum price, and its factories are the ones paying the lowest bonus,” writes Alfred Njagi, former Managing Director of KTDA Management Services Ltd.

“There are a few exceptions like Momul, which has a high-quality culture, so it’s pay-is-the-best in the West and even beating some of the factories in the East,” said Njagi.

Nyankoba’s 19,244 growers will be paid a KSh40 bonus per kg of green tea sold by the factory, an increase of Sh5 from the Sh35 they earned from last year’s crop but nowhere near the hundreds of shillings per kilo in final bonuses that were paid to growers in past years.

SPOTLIGHT

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Samovar Tea at Sunset

Fifty years ago, three industrious Turkish brothers in Havza near Türkiye’s tea-growing region along the Black Sea, fabricated a modern chromium steel version of the traditional samovar. These storied vessels, fired by wood or coal, brew tea while keeping large volumes of hot water on tap.

The Sözen brothers were skilled copper, bronze, aluminum, and steel metalworkers. Their compact, easily disassembled design for Sözenler Semavers (the Turkish word for tea-urn) is now the nation’s most popular brand.

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Kenya’s Annual Tea Bonus Brings Strife |Sri Lanka Reinstates Minimum Daily Wage Challenged in High Court | Lipton CEO Nathalie Roos Resigns | Episode 186 | 20 July 2024

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Pure Leaf sales exceeded $985 million in mass market and convenience outlets in 2023, compared to competitors Arizona’s $956 million and Lipton’s $561 million. Globally, the RTD market is forecast to increase by $27.7 billion, a 25% growth rate, from 2024 to an estimated $138.15 billion in 2028.
An accompanying press release explains, “The Pure Leaf Tea Break campaign encourages workers to challenge today’s hustle culture with a centuries-old workplace ritual—a quality tea break—and the first bottle is Pure Leaf Iced Tea.
Lindsay Lohan said, “We owe it to ourselves to take a moment each day to pause, recharge, and revitalize. I’m proud to partner with Pure Leaf to promote the importance of taking a daily tea break because no matter what you do, we all deserve the time to reset and refresh. For me, prioritizing breaks is essential for all of the roles I juggle, allowing me to return stronger and more restored.”
Pure Leaf and Mind Share Partners are providing tips for making the most of work breaks and posting examples of “away on a break” messages online.
“To support the cultural shift toward better breaks at an organizational level, Pure Leaf is also launching the Pure Leaf Tea Break Grant program in partnership with Mind Share Partners. This initiative will provide funding for small businesses and non-profits to implement break initiatives aimed at promoting employee revitalization,” according to the release.
Julie Raheja-Perera, General Manager/VP – Pepsi Lipton Partnership North America, says, “At Pure Leaf, we are intentional about how we craft our delicious real brewed iced teas so you can feel refreshed and revitalized. We know many people are not taking enough quality breaks during the workday, so we’re launching the Pure Leaf Tea Break to remind people that a moment to reset is very important. Revitalization is just a sip away with our delicious, iced teas made from a few high-quality, simple ingredients and naturally occurring caffeine from tea leaves.”

Suez Shipping Disruptions Intensify

The Red Sea skirmishes, a significant factor in the ongoing shipping crisis, have increased sinkings, indicating that the crisis is far from over.

A surge in global freight rates, reaching over $4,200 per 40ft container in May 2024 – the highest on record – has put a significant financial strain on tea exports and other goods since October 2023.

Tea exports are currently at their peak following the spring harvest. India’s peak is from April through June, Sri Lanka’s is from May through August, and Kenya’s is from January to June.

Demand for tea in Europe is slack, which has helped avoid a serious shortage of tea imports, but the added cost of landing tea from Africa, South Asia, and the Far East cannot be ignored. One German-based retailer told Tea Biz that they are shipping tea by rail from China, which is faster and cheaper than shipping tea around Africa.

Since the beginning of the year, the Drewry composite container index has averaged $3,579 per 40-ft container, $831 higher than the 10-year average. Containers are in short supply and out of place because ships are not transporting empties. The cost of shipping tea from China to the US ports has also increased by 69% from April through May 24.

The Houthis have launched 50 missile and drone attacks since October, killing four. In the latest, the Yemen-based, Iran-backed militants used explosive-laden drone boats to slow or disable large vessels that are then targeted by ballistic missiles. A “double tap” on June 19 destroyed the Tudor, a bulk carrier. Two more successful missile attacks followed, disabling another bulk carrier. The Houthis sank their first ship in March.
Fuel and insurance costs have increased due to higher risk and because ships spend more days at sea. Lloyd’s of London reports a £1.1 billion expense associated with underwriting unrecoverable planes and cargoes in Ukraine since the onset of the war.

Only 4% of war claims have been processed.

Egyptian authorities say revenue plummeted by several hundred million dollars due to the Red Sea skirmishes.

According to Egypt’s Minister of Finance, traffic through the Suez Canal declined by 64% in May, lowering revenue to $334 million, more than 50% lower year-over-year. Losses in late 2023 amounted to $150 million.
Only 1,111 ships traversed the canal in May, compared to 2,396 ships in May 2023. Tonnage is down 68.5% to 45 million tons. About 15% of trade by volume transits the canal annually. The canal is the shortest maritime route between Europe and Asia.

According to the International Monetary Fund, ship traffic transiting the Cape of Good Hope has surged 74% above 2023 totals. A drought that limits the capacity of ships transiting the Panama Canal, where trade volume is down 32% compared to 2023, further complicates the situation for shippers.

Botanists Identify the Gene that Causes Tea Leaf Droop

Researchers at the Tea Research Institute of the Chinese Academy of Agricultural Sciences report finding a gene that could transform the tea industry’s approach to mechanical harvesting.

An estimated 70% of the world’s tea is now sheared or mechanically plucked, but in most instances, the leaves gathered are damaged, yielding a relatively small percentage of “perfectly plucked” two leaves and a bud. Instead of snipping whole leaves at their base, leaves on stems that bend or droop are cut into small pieces and later discarded during the sorting process.

The study identified the CsEXL3 gene and gene regulator CsBES1.2 as the source of weak stems. Their findings, first published in the peer-reviewed journal Horticulture Research, could improve harvesting by minimizing leaf damage, leading to better-tasting tea.

Planters turn to mechanical harvesters to reduce labor expenses and improve efficiency by increasing the number of rounds while lowering costs.

One of the lead researchers, Dr. Jiedan Chen, writes that discovering the gene and its regulatory pathway “offers a promising genetic target for breeding tea plants better suited for mechanical harvesting, potentially revolutionizing the tea industry.”

Haoran Liu et al. explain that CsEXL3 regulates mechanical harvest-related droopy leaves under the transcriptional activation of CsBES1.2 in tea plants, Horticulture Research (2024). DOI: 10.1093/hr/uhae074

BIZ INSIGHT – In 1952, Agronomist Norman Borlaug learned of the sturdy stems of dwarf wheat in Japan. For his experiments, he obtained seeds with the stem-strengthening gene. Working with a USDA plant breeder at Washington State University, he developed disease-resistant plants that yielded more wheat per acre than any known cultivar. The wheat was first planted in Mexico, and by 1956, Mexico was producing enough wheat to be self-sufficient. Borlaug’s cultivars, which produced 14 times more wheat than previous cultivars, were introduced worldwide, averting famine and saving an estimated one billion lives, including several million people in India’s great famine. Borlaug would earn a Nobel Prize and became known as the father of the Green Revolution.

FEATURE

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Tea Rebellion: Anatomy of a Purpose-Driven Brand

By Dan Bolton

 Raj Vable, founder of Young Mountain Tea in Marquette, Mich., inspired the villagers of Kumaon to create a new era of economic resiliency and autonomy. The solar-powered factory with state-of-the-art equipment will process regeneratively grown certified organic tea in four styles available in retail locations by November. Vable writes, “We hope our model serves as a blueprint that can be replicated and improved upon so we can all collectively raise the bar on transparent sourcing, regenerative agriculture, and smallholder farmer equity.” 

Raj founded Young Mountain Tea in 2013 as a social enterprise to provide a sustainable future for farmers, 90% of whom are women. He graduated from the University of Michigan and later earned an MS in environmental science from the University of Oregon. He first traveled to Kumaon as a Global Partner with AVANI, spending a year developing a permaculture tea cultivation program involving 300 farmers. He was named a Fulbright-Nehru Scholar in 2013 and worked in Almora, India, before returning to the US as a Rural Venture Catalyst in Oregon’s Regional Accelerator Innovation Network.

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Lindsay Lohan TV Ad Advocates Office Tea Breaks | Suez Shipping Disruptions Intensify | Botanists Identify the Gene that Causes Tea Leaf Droopiness | PLUS Revitalizing Kumaon | A century ago, Kumaon’s high-mountain estates were abandoned. The formerly productive tea fields lay fallow until an enterprising young entrepreneur marshaled the resources of US-based Frontier Co-op and USAID’s Cooperative Development Program to benefit hundreds of tea smallholders. | Episode 175 | 5 July 2024

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