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The Kenya Tea Development Agency (Holdings) Limited has today declared a KShs 734 million dividend for its smallholder tea farmers for the financial year ending 30th June 2020
This year’s declaration represents a 15% increase from the previous year’s dividend (KShs 683 million) and comes on the back of enhanced green leaf production over the same period which led to growth in total revenues for the year.
To ensure farmers benefit from the tea value chain, KTDA has established subsidiary businesses which have led to this increased revenue.
Commenting on the declaration, KTDA Holdings Limited Chairman, Peter Kanyago, said, “Group revenues grew last year, driven mainly by increased tea sales volumes. Increased tea production led to high stocks at the peak of Covid-19 and exerted considerable pressure on working capital within the Group. The Board has proposed a dividend of KShs 734 million compared to last year’s KShs 683 million, a welcome performance in an otherwise very difficult year.”
He added that the company is continuously working on addressing the cost of production to enhance farmers’ earnings. “We continue to address the escalating cost of production through various ongoing initiatives, the latest being the seasonal labour outsourcing and energy efficiency programs,” he said.
Commenting on the same, KTDA Holdings Group CEO, Lerionka Tiampati, said average cost of production had declined by 6.6 percent on the back of effective cost containment measures.
“The average cost of production reduced by 6.6% from KShs 88.98 to KShs 83.09 per kilogram of made tea mainly driven by higher cost absorption from higher volumes and cost containment measures instituted,” he said.
“The group will continue to focus on its value chains ensuring that each company remains financially strong and relevant in the chain. Enhanced stakeholder management, adoption of new technologies and diversification of products and services will be key in navigating the future. Increased focus will be placed on staff welfare, training and development as well as prudent financial management of each company in the group.”
Smallholder tea farmers under KTDA management delivered 1.45 billion kilograms of green leaf for the period under review, up from 1.13 billion kilos the previous year, translating to a 13 percent growth in total revenues for the factories from KShs 69.8 billion last year to KShs 79.0 billion.
The growth in green leaf production offset the reduced earnings per unit kilo of sold tea for the year which averaged USD 2.38 from USD 2.59 the previous year.
By resolution of the 54 tea factory companies’ directors last year, the dividend is paid directly to farmers’ accounts as the shareholders of the 54 Tea Factory companies that own KTDA Holdings Limited. Previously, the dividends have been by the factories together with the final payments.
The dividend accrues from revenues realized by KTDA Holdings Ltd and its subsidiaries and is over and above what farmers earn as monthly or initial payment.