By Mandere Onyinkwa
The Kenya Tea Development Agency (KTDA) has moved to reassure smallholder tea farmers that factories under its management remain financially stable, dismissing social media claims suggesting financial distress and delayed payments as false and misleading.
In a statement issued on Friday, KTDA said all factories continue to meet their obligations to farmers and other stakeholders in a timely manner, despite challenging market conditions in recent years.
“KTDA wishes to clarify that all factories under its management remain financially sound and continue to meet their obligations to farmers and other stakeholders in a timely manner,” the Agency said.
The Agency specifically refuted allegations that tea factories are borrowing to stay afloat or facing auctioneer threats, describing such claims as “false, misleading, and deliberately aimed at discrediting the smallholder tea sector.”
KTDA explained that limited short-term borrowing, where it occurs, is a routine practice designed to bridge timing gaps between farmer payments and the eventual sale of processed tea.
“Factory borrowing—where it occurs—is limited to short-term facilities used to bridge timing gaps between payments to farmers and the eventual sale of processed tea,” the statement noted.
According to KTDA, farmers are paid almost immediately upon delivery of green leaf, while made tea may take months to sell, especially during periods of high stock levels.
This mismatch can occasionally necessitate short-term financing to ensure uninterrupted payments.
The Agency emphasized that such borrowing is fully secured against properly valued tea stocks and approved by factory boards elected by farmers.
“All loans—whether short-term or for development—are sanctioned by factory boards elected by farmers to represent their interests, adhere to prudent financial management practices, and are supported by proper, auditable valuations,” KTDA said.
KTDA also addressed persistent claims about deductions from farmer earnings to fund a stabilization scheme, stating unequivocally that no such deductions have ever been made.
“Accordingly, no monies were deducted from farmer payments, nor were funds from any other source allocated to such a scheme,” the statement read.
While the idea of a stabilization fund had previously been discussed as a possible way to support second payments during periods of depressed returns, KTDA clarified that the proposal was never implemented.
The Agency further acknowledged the Tea Amendment Bill currently before the National Assembly, noting that it has proposed amendments aimed at safeguarding farmers’ interests.
KTDA urged stakeholders to ignore what it termed misinformation intended to erode confidence in the sector, reaffirming its commitment to transparency, accountability and sustainable value creation for over 650,000 smallholder tea farmers.
“We urge all stakeholders to disregard misinformation intended to undermine confidence in the sector and reverse the gains made by smallholder tea farmers,” the Agency said.